Makeover sees Viatris move further away from generics

Back in February Viatris, a relatively newly formed speciality pharma company, decided to sell off its biosimilar assets for up to $3.4bn to Biocon Biologics, promising an additional $4-6bn of future divestitures. While investors are still awaiting news on these, Viatris’s makeover has continued apace, with two acquisitions launched yesterday.

For about $300m Viatris has secured the lowball buyout of Oyster Point Pharma, and it is spending another $400m or so to take over the private Indian company Famy Life Sciences. Together the acquisitions are said to be capable of bringing Viatris an extra $1bn in sales and $500m in operating profits by 2028.

The aim is to give Viatris an ophthalmology presence, specifically with drugs that carry patent protection. Viatris was established in 2020 when the struggling generics player Mylan was merged with Upjohn, a business into which Pfizer had spun its off-patent legacy drugs like Lipitor. Since then, Viatris has been working out what to do with such a disparate portfolio.

The answer appears to be to move away from generics and towards novel drugs, especially those approvable through the abbreviated 505(b)2 pathway. Thus Famy Life Sciences and Oyster Point can be seen as two steps towards giving Viatris a patent-protected basis from which it might be able to grow.

Interestingly, Viatris has already had one bite at the Famy cherry: back in 2015 Mylan bought Famy Care for $800m. Famy Care had a women’s health focus, and like Famy Life Sciences had been set up by Taparia Group, a family-owned business with a presence across several industries.

While Famy Life Sciences will give Viatris a pipeline of eye disease projects in mid-stage trials, the marketed asset will come from Oyster Point in the shape of Tyrvaya, a nasal spray formulation of the active ingredient contained in the smoking-cessation drug Chantix. Tyrvaya was approved a year ago for dry eye disease.

The buyout represents a rescue of sorts for Oyster Point, whose stock had fallen some 80% since peaking in early 2020. Though the $11-a-share cash deal, plus a non-tradeable $2 contingent value right triggered by future Tyrvaya sales, is a comedown from the $16 at which Oyster Point had floated, as lowball buyouts go this is not a bad result given the past year’s market turmoil.

The Biocon divestment is to be completed by the end of this year, and the Oyster Point takeover will close in the first quarter. As for additional asset sales, Viatris investors are still waiting.