Due to spinoffs from Big Pharma behemoths, two small pharma firms are launching at the same time. One analyst believes that the two companies’ markets are close enough to warrant a merger. Organon was formed from Merck & Co.’s offloaded women’s health and biosimilar franchises, while Viatris was formed from a combination of Mylan and Pfizer’s Upjohn generic company.
In a note to clients, Bernstein analyst Ronny Gal wrote that a merger between them “seems rational given similar business models and complementary properties.” According to Gal, both firms are hoping to use cash from legacy brands to fund acquisitions of bolt-on properties. However, following Organon’s recent investor day and Viatris’ first-quarter earnings call, the analyst deemed Organon to be the more reliable of the two.
Despite the fact that Viatris broke down the number into several segments—and several analysts praised the firm for its openness during a conference call—Gal believes it is still insufficient. Viatris’ first-quarter sales of branded drugs fell 8% to $2.73 billion in constant currencies, while sales of generics fell 8% to $1.35 billion. While complex generics and biosimilars saw a 27 percent increase in revenue, the unit only made $329 million in the quarter. During a Monday conference call, analysts from Evercore ISI and J.P. Morgan praised executives for being transparent about product sales, but Gal disagreed.