Good morning, everyone. I'm Bill Szablewski, Global Head of Capital Markets for Viatris. It is my pleasure to welcome you to our Investor event. With us today is our CEO, Michael Goettler, our president, Rajiv Malik, and our CFO, Sanjeev Narula. We have a lot to share today regarding the reshaping of Viatris into a simpler, stronger, and more focused company. Before we get started, I need to cover off a few disclaimers. During today's Investor event, we will be making forward-looking statements on a number of matters, including our financial guidance for 2022 and various strategic initiatives. These forward-looking statements are subject to risk and uncertainties that could cause future results or events to differ materially from today's projections.
Please refer to today's slide presentation or the press release that we furnished to the SEC on Form 8-K earlier today 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 financial metrics of Viatris on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them to supplement your understanding and assessment of our financial performance. Non-GAAP measures should not be considered as a substitute for or superior to financial measures calculated in accordance with GAAP. The most direct comparable GAAP measures, as well as reconciliations of non-GAAP measures to those GAAP measures, are available on our website at investor.viatris.com and in the appendix of today's slide presentation.
The information discussed during the presentation, except for the participant questions, is the property of Viatris and cannot be recorded or rebroadcast without Viatris' express written consent and permission. An archived copy of today's presentation, along with a replay of the webcast, will be available on our website at investor.viatris.com following the conclusion of today's event. With that, now I'd like to hand it over to our CEO, Michael Goettler.
Thank you, Bill. Good morning and welcome to Viatris 2022 Investor Event. This is truly an exciting day for all of us at Viatris, for our 37,000 colleagues around the world, and for our shareholders. Not only are we reporting strong financial results for the full year of 2021, meeting or exceeding our guidance, today we'll lay out for you exactly how we expect to deliver on our vision for Viatris. We'll further review with you our current pipeline, our scientific capabilities, our proven track record, and how we intend to reshape our portfolio towards higher margin, more durable assets such as NCEs and 505(b)(2)s. Finally, we'll give you an update on our business performance and execution, our 2021 financial results, and our 2022 guidance. Next slide, please.
Now, what you will see is a Viatris that is simpler, that is stronger, and that is more focused. The Viatris that we expect to deliver more access to patients and more value to shareholders with a durable higher-margin portfolio, significant financial flexibility, and shareholder-friendly capital allocation, and further enhanced commercial and scientific capabilities. We'll lay out to you our very bold plan to reshape our company. With today's announcement of the Biocon biosimilar transaction, we've already taken the first bold step to unlock value, accelerate our financial commitments, and increase availability of capital for investing in our future or returning value to shareholders. Next slide, please. Viatris was created a little over a year ago, as you know, in November 2020, through the combination of Upjohn and Mylan. Our first year was focused on our immediate priorities of integrating the two companies and delevering our balance sheet.
We wasted no time. As you know, in December 2020, we already announced a significant global restructuring plan and executed against this plan. We defined and delivered clear financial targets, including our 2021 budget, our synergy targets, our goal to pay down $6.5 billion in debt by 2023, and the initiation and growth of a quarterly dividend. I'm very pleased to say that we have now delivered 4 quarters consecutively of consistent and solid performance, meeting or exceeding our guidance. Sanjeev later will provide you more details on our full year 2021 results. Meanwhile, our pipeline achieved many significant milestones, including the historic approval of the first interchangeable biosimilar in the U.S. and the first approval of a generic to Restasis. Meanwhile, externally, we're recognized as one of the top five companies on Fortune's Change the World list.
We're recognized by Forbes as one of the World's Best Employers and by Newsweek as one of America's most responsible company. Most importantly, through 2021, we conducted a thorough strategic review of our entire business. We determined what was core and what was non-core to the future of our company. Today, I'm excited to share with you the output of that review and the actions that we're taking. Today, we're announcing a significant global reshaping initiative. The Biocon biosimilar announcement is only the first but critical step to unlock value and reshape Viatris. Combined with other initiatives, we expect to significantly enhance our financial flexibility, accelerate our financial commitments, and enable us to invest in our future, continuing to move up the value chain by expanding to more innovative areas and to return value to shareholders. Next slide, please.
We're taking immediate and concrete actions to execute on that plan. To unlock value and to simplify our business beyond the Biocon biosimilar transaction, we've identified other select assets which we expect will unlock additional value. As we continue to execute against our plan, we will become more efficient, reduce complexity, and make Viatris a simpler, stronger, and more focused company. In total, we expect these initiatives to generate up to $9 billion in pre-tax proceeds by the end of 2023. Let me just put this in perspective. This is more than half of Viatris' current market cap. In return, we're trading off approximately 20% of our current adjusted EBITDA. Sanjeev will provide you further details about our future financial profile later. These proceeds will immediately accelerate our financial flexibility.
Our financial commitments for phase I, so that's the year 2021, 2022, and 2023, remain unchanged. Pay down $6.5 billion in debt, achieve $1 billion in synergies, and grow our quarterly dividend to return value to shareholders. In addition, we expect to have significant capital available to return to shareholders through share purchases and/or investing in the growth of our business. For this, the board of directors has already authorized a share repurchase program of up to $1 billion. Share buybacks will be an important benchmark for us as we make future capital allocation decisions and decide how to invest in our future. Our goal is to enhance our proven scientific capabilities and current global platform, including our Global Healthcare Gateway, to create a durable and higher-margin portfolio of products.
That means further expanding beyond our current scope into more innovative products, including NCEs and global 505(b)(2)s. For that, we've identified three core global therapeutic areas: ophthalmology, gastrointestinal, and dermatology, and that we believe will particularly fit our capabilities and our platform, and where we have a credible path to leadership. We're also further enhancing our commercial and scientific capabilities as needed for this future portfolio. We intend to double our R&D investment, ramping up steadily to approximately 9% of revenue by 2026 to bolster our pipeline organically. We expect to inorganically grow via business development through our Global Healthcare Gateway. Now, I'll explain further details on that strategy later, but for now I would like to hand it over to Rajiv for further details on the Biocon biosimilar transaction, and I come back later. Rajiv?
Thank you, Michael. As Michael just outlined, we have identified certain assets as a part of an extensive strategic review. These assets have a potential to unlock the trapped value and are potentially non-core to the future direction of the company. These assets can generate up to approximately $9 billion of pre-tax total proceeds. The plan is being executed as we speak, and up to $3.335 billion of these proceeds will come from the Biocon transaction, which I will walk you through now. The transaction we announced today is a first step towards creating a simpler, stronger, and more focused Viatris. Under the terms of the agreement, Viatris will contribute its biosimilars business to create what we expect to be a unique, vertically integrated global biosimilars leader.
It's not only the right natural next step for our partnership, but also a continuation of our biosimilars journey, and enables us to participate in this space in a more optimized way while unlocking substantial trapped value. We believe this evolution positions Biocon Biologics to further optimize and maximize the biosimilars business. Viatris and Biocon started the journey together in 2009, even before the biosimilars regulatory pathway was defined in many markets. We had many successes together and continue to build upon our momentum by adding more products to our pipeline. Together, as partners, we have seen this landscape evolve from a science, regulatory, and customer perspective. Biosimilars are heading steadily towards a phase of a mature market, and as was in the case of generics, vertical integration will prove to be decisive to stay ahead.
We believe this transaction positions the company as a world-class vertically integrated biosimilars leader and will enable the new company to optimize end-to-end operational capabilities, serve market needs with the competitive advantages, and will have staying power. The transaction is subject to customary closing conditions, including regulatory approvals. Viatris will receive total consideration of up to $3.335 billion. $3 billion of the consideration will be received immediately on closing with $2 billion in cash and $1 billion of convertible preferred shares. Viatris also expects to receive deferred consideration up to $335 million. Viatris will own a stake of at least 12.9% of the combined business on a fully-diluted basis. We currently expect the combined business operating as Biocon Biologics to commence an IPO in India by late 2023.
The deal consideration represents a transaction multiple of approximately 16.5x based on estimated 2022 adjusted EBITDA of our biosimilar business of approximately $200 million. Under the terms of the agreement, Viatris will contribute its biosimilar business, which includes all the programs currently partnered with Biocon, as well as our biosimilars program for Humira, Enbrel, and EYLEA. To facilitate a smooth commercial and operational transition, we will provide via a TSA select services such as commercial, regulatory, and clinical. We will receive cost plus a markup of $44 million annually for the duration of TSA. Now a bit on the share consideration. We will receive $1 billion of the convertible preferred shares that represent a stake of at least 12.9% on a fully-diluted basis.
We believe Viatris will be positioned to generate additional significant value through the potential upside of our ownership stake in the combined business. An IPO in India is targeted in late 2023, and Viatris has a certain priority rights in an IPO. Viatris will also receive customary anti-dilution and preemptive rights. On governance, Viatris will be granted one seat on the board of Biocon Biologics. In terms of timing, while the transaction is subject to customary regulatory closing conditions, we currently expect the transaction to close in the second half of 2022. We expect the TSA services will end by quarter four of 2024. The transaction is an exciting evolution to our partnership with Biocon. I look forward to sharing more with you soon about how we will leverage the proceeds to reshape the Viatris for the future. Now, I will turn it over to Sanjeev.
Thank you, Rajiv, and good morning, everyone. It's been an exciting day for Viatris. Today, we announced strong Q4 and full year 2021 results and financial guidance for 2022. We've entered into an agreement with Biocon Biologics for a total consideration of up to $3.335 billion. We've also announced a plan to reshape the company, which we expect to unlock additional value. In next few slides, I'll walk you through the reshaping initiatives underway, how it strengthens our profile, accelerates financial flexibility, and enhance our capital allocation framework. Slide 15 represents an illustrative pro forma for what Viatris could look like post-closing of Biocon Biologics transaction and after execution of plan for other select assets. There are few key takeaways to highlight.
First, as a result of the partnership structure and profit-sharing arrangements of the biosimilar business, the estimated 2022 biosimilar-adjusted EBITDA margin is relatively lower compared to our company average. Second, looking at pro forma company, total revenue and adjusted EBITDA will remain largely intact after the transactions. Next, the Biocon transaction at roughly 16x 2022 adjusted EBITDA and estimated proceeds from other select assets are expected to unlock significant value above our company's current valuation. Finally, we expect these transactions will significantly strengthen our financial profile, unlock up to $4 billion-$5 billion of after-tax proceeds that will be deployed for investing into business and returning capital to shareholders. Turning to slide 16, we highlight our illustrative financial profile across revenue, profitability, and the balance sheet.
For revenue, we plan to complement annual product revenue of approximately $500 million with business development that is targeted towards assets that fit our strategic, commercial, and financial criteria. These opportunities can come in form of regional tuck-ins, a therapeutic-focused pipeline, and a broader distribution type arrangements via our Global Healthcare Gateway. For profitability, we expect gross margins to stabilize over time given the focus on complex product that are wholly owned and not subject to partnership payments. Given our track record of success and the value upside afforded by more durable, higher margin of complex products, we intend to increase on R&D investments. We expect SG&A to continue to benefit from synergies in 2022 and 2023, averaging out at approximately 20% of total revenue.
Finally, upon closing of the Biocon transaction, our balance sheet will be immediately strengthened with $2 billion in pre-tax proceeds to accelerate our phase I financial commitment. Now turning to slide 17, we expect that the anticipated cash proceeds from Biocon transaction, along with the plan for other assets, will provide additional flexibility and enhance our capital allocation framework. Under phase I, we intend to accelerate the base plan by retiring short-term debt in 2022. In total, we intend to pay down at least $6.5 billion of debt between 2021 and 2023 in order to reduce our gross leverage to approximately 3x by the end of 2023. We intend to increase R&D and pipeline investment for future health of the business.
As a result, we're taking a more balanced approach to capital allocation and have revised our midpoint of long-term gross leverage target from 2.5x- 3x . With the anticipated proceeds from Biocon Biologics and other select asset transactions, we expect to accelerate investment into business and return more capital through potential share repurchases. We will take a measured approach and evaluate each option against our internal hurdle rate and other criteria. Now I'll turn it over to Michael.
Well, thank you, Sanjeev. Now, as we said, we plan to expand our portfolio to more innovative and more durable assets, such as NCEs and 505(b)(2)s, and we will do that in a very focused way. Now, for this, we conducted a thorough analysis of our current strengths and capabilities, especially our scientific capabilities. We looked at market sizes and growth opportunities. We looked at the degree of unmet medical needs and the opportunity for innovation, availability of phase II and phase III late-stage assets. We looked at who our competitors would be and who our prescribers are. The results were clear. Some therapeutic areas had too much competition or too much scientific risk for us to see credible paths to leadership in the time horizon that we're looking at. Others were too small or didn't provide enough room for innovation.
As I already mentioned earlier, three therapy areas in particular hit the sweet spot for us. That's ophthalmology, dermatology, and gastrointestinal. Depending on the opportunity, we may not pursue all of these equally at the same time, but they represent the kind of therapeutic area where we have the ability to leverage our existing infrastructure and maximize the opportunities. Next slide, please. Viatris today already has a unique hybrid model with the requisite capabilities spanning from what is needed to be successful in the generic space to a strong base for what is needed in the brand and innovator space, and we expect to further expand on the innovator capabilities as we hone in on the targeted therapeutic areas. Next slide, please. To build a durable portfolio of innovative assets, we already have a solid platform to build on.
We already have a proven track record in development and have a true development powerhouse. Rajiv will talk about this a little bit later. We already have a global commercial infrastructure. We already have a best-in-class global supply chain, quality and operational excellence. The Global Healthcare Gateway is the heart of the company as we leverage our existing platform and expand into more innovative areas. In fact, today we're announcing that we already have entered into our first Global Healthcare Gateway transaction focused on ophthalmology, acquiring an exclusive license for pimecrolimus ophthalmic ointment for the treatment of blepharitis, which is a very common type of eye irritation. Blepharitis affects about 6.5 million patients in the U.S. alone, and in the U.S., there's currently no product specifically indicated for chronic blepharitis. This product will contribute to ophthalmology franchise while we continue to search for an anchor asset.
The path to leadership for us starts with the acquisition of an anchor asset in one or more of the three therapeutic areas, as well as expanded R&D investment in those areas. It's through the Global Healthcare Gateway and our global platform that we believe we can leverage the full global potential of these assets organically or inorganically add complementary growth assets in some of these therapeutic areas, and then leverage the benefit of therapeutic area leadership and focus by leveraging the existing healthcare provider coverage, leveraging our existing development expertise, leveraging our existing medical expertise, leveraging the connections we have in the scientific community, et cetera. As I said, we see clear paths to therapeutic area leadership in one or several of the TAs that we identified. Let me summarize on the next slide. Viatris of the future is simpler, stronger, and more focused.
We have and are already executing on a clear path to reshape the entire company and build a durable, higher margin portfolio consistent of generics, complex products, and off-patent brands. We take some strategic actions on certain assets but add an innovative growth engine of NCEs and 505(b)(2)s in our targeted therapeutic areas. With this, we expect Viatris to have significant financial flexibility. In addition to debt paydown and dividend growth, we now expect to have the opportunity for increased R&D investment, for extensive BD activities, as well as share buybacks. Finally, building on our current platform and capabilities, we intend to have further enhanced commercial and medical excellence with a focus on the identified therapeutic areas. Bottom line, a simpler, stronger, and more focused company delivering access to patients and value to shareholders.
With that, I'd like to hand it over to Rajiv now, who will be giving you more details on our pipeline and how we're further enhancing that pipeline in line with our strategic vision. Thank you, Rajiv.
Thanks again, Michael. I'm going to focus this next session on the role our strong development platform can play to achieve the end goal of going up the value chain. As we have already touched on, enhancing our R&D is an essential part to achieve the future direction of the company. I am very proud of many accomplishments of our science team over the years. As I see it, we are a development house with capabilities that can be further strengthened and focused in coming years as we continue to move up the value chain.
We intend to leverage our Global Healthcare Gateway to further strengthen our R&D engine with differentiated and novel products that target gaps in care. We believe that we are an ideal development partner that offers strong science, regulatory, and clinical skills, as well as strong global commercial footprint to companies with phase II and III assets. We'll continue to invest in generics with a focus on complexity and diligently pursue life cycle management opportunities around our current therapeutic areas.
We expect to ramp up our R&D investments steadily to approximately 9% of revenue by 2026. This slide shows our roadmap to execute our R&D evolution. On the left, you see where our portfolio and pipeline is today, which is diverse across a wide range of therapeutic areas across segments and markets. We intend to continue to build the pipeline, focusing on products with complexity, and also investing in life cycle management of certain key products in our current portfolio of various regions. I'll walk you through certain examples in one of my following pipeline slides. We will seek additional inorganic assets through our Global Healthcare Gateway around current therapeutic areas of regional focus.
More importantly, we'll be aggressively looking into several phase II and phase III opportunities to build critical mass of new chemical entities and 505(b)(2)s novel products in the three focus therapeutic areas of GI, ophthalmology, and dermatology, as Michael mentioned. In order to execute our R&D strategy, we will leverage the foundation that has been built over a number of years. This slide highlights our extensive scientific capabilities we have across a broad range of dosage forms and delivery mechanisms. We also have proven expertise in all of the related areas that are essential to develop and scale these types of products up through and including novel products.
For example, the robust API and formulation development capabilities, the global expertise in preclinical study design and execution, as well as device engineering, strong clinical development and medical affairs across multiple therapeutic areas, strong in-market regulatory, legal, and IP skill sets, and broad and scalable manufacturing capabilities. The backbone of this platform is, of course, a strong team of 3,000 scientists and medical professionals working across 12 development centers and having regulatory expertise in 55 markets. We have a broad range of demonstrated clinical experience and have co-conducted over 80 clinical development and post-marketing programs, including phase I, phase II, phase III, and phase IV studies. The bottom line is that we believe we are well-positioned to support and enable the advancing of the science up the value chain. There is no better representation of our scientific expertise than this slide of proven results.
When we make a decision to pursue the development of a complex generic or a novel product, our track record shows our commitment. On average, complex products can take seven-nine years from development to approval, and we are so proud to bring most of these products first to the market. Recently, we added another first to our basket with the approval of generic Restasis, building off the momentum of our first interchangeable biosimilar, Semglee. I would like to dive a bit deeper into our existing pipeline to help visualize this progression. Beginning with our core generics. As you can see, we have either launched, or have approval or have submitted some of significant products such as generics for REVLIMID, Xarelto, and Eliquis.
We are targeting launching many of these core generics in the next one-two years. Flipping to the next slide, as you can see, we're continuing to move up the value chain with more complex products. Projected launch timings for many of these are in the next two-four years. What's unique about our complex generics pipeline is that it's primarily vertically integrated, giving us a much better control on the execution of these programs and R&D flexibility you need to succeed and bring these products to the market. It also improves the margin profile of these products as we will no longer be sharing the profits. I'm very confident that like in the past, we are well-positioned to bring the first generic of many complex products to the market, such as Symbicort, Invega Trinza, Pentasa, and Abilify long-acting injection.
As I mentioned earlier, in the next five years, we also intend to invest in the lifecycle management of certain core products in our portfolio to meet unmet patient needs. We are already doing this for many products, such as levothyroxine in oral suspension, which we have submitted and expect a regulatory action this year. Glatiramer once-monthly injection builds upon our success with generic Copaxone, and we are completing the clinical phase of the development in remitting and relapsing multiple sclerosis. We have also initiated a phase IV trial and are investing in the science around our YUPELRI to explore the impact of revefenacin on a peak inspiratory flow rate and further expand the patient base. We are investing in the lifecycle management of our Xulane product and have initiated a phase III study on a low-dose option.
We have initiated clinical study for Effexor in Japan to extend the labeling for generalized anxiety disorder. We are developing several new fixed-dosage combinations in cardiovascular for Chinese market. Finally, we are also developing meloxicam for rapid onset of post-surgical pain. We have submitted our IND and are now entering into our phase II studies. As we enhance our R&D investments and put our capital to use, we look forward to further concentrating this pipeline around GI, ophthalmology, and dermatology. Our pipeline, excluding biosimilars, that we shared with you today is well-positioned to deliver approximately $500 million-plus in new product launches annually after 2023. Our total pipeline is valued at $183 billion in IQVIA brand value. This broad pipeline also shows that we will cover almost 80% of the current top 100 IQVIA products, and it's more heavily weighted on complex products.
I can hope you can feel and appreciate the excitement and the confidence we have in our platform. Let's now pivot and discuss the business execution for the near term. While we reshape Viatris in the coming years, our business execution remains a top priority. I walked you through how we will reshape our portfolio and deliver the pipeline earlier. Now, I'll provide an update on how we performed in 2021, the progress on integration, and how we expect to continue to further stabilize the business in 2022. 2021, we performed strongly as a team while we were creating a new company and navigating a dynamic environment. I truly appreciate and thank all of my colleagues around the world who seamlessly executed a successful first year as Viatris. We made significant progress with our integration.
We executed our restructuring program and achieved our target of approximately $500 million of cost synergies while already executing the Pfizer TSA exits for several programs. We delivered strong overall results, exceeding our expectations across all segments. In developed markets, Europe benefited from our thrombosis portfolio, as well as strong performance in key brands like Influvac, Lipitor, and biosimilars. North America's base business performed as expected, despite unexpected competition in products like Miacalcin. YUPELRI and EpiPen were other key contributors to the growth. We effectively managed the dynamics of the hospital channel in China while strongly growing the Retail segment.
Emerging markets responded to the challenge of providing the COVID-19 related products like Remdesivir and AmBisome in several of their markets, which helped them offset the impact of changing therapy in antiretrovirals. Japan managed the Lyrica LOE exceedingly well, growing Amitiza and Leukeran while leveraging the portfolio of authorized generics. On the pipeline front, we delivered on our commitment of approximately $700 million in new product revenue and significantly progressed our robust pipeline of hard to make and complex products. Our science teams once again made us proud with the FDA approval and the launch of the first interchangeable biosimilar Semglee to expand access for patients with diabetes. The strong performance across the globe was well-supported by our global supply chain, which enabled us to achieve a record high customer service levels while navigating COVID-19. Let me speak on the integration path forward.
We remain on track to realize an additional $500 million cost synergies over the next two years, resulting in a $1 billion cumulative cost synergies since becoming Viatris. Our synergies in 2021 were largely focused on actions around cost of goods, SG&A, cost avoidance, and restructuring. As planned, the remaining focus for our cost synergies in 2022 and 2023 is on the restructuring and exiting the remaining Pfizer TSAs. We have already completed a number of TSA exits through February of 2022 and expect to exit the remaining TSAs by the end of the year. Let me now talk to you about 2022. We are laser-focused to continue to further stabilize the business during this transition period. You will have this slide as a reference point as I would like to move to the next one to review the headwinds and tailwinds in 2022.
We are well-positioned to build on the momentum of 2021, and we will do this by delivering the approximately $600 million of new product launches, which I will talk about more on the next slide. Driving growth in our key markets, including Europe, where we expect mid-single-digit growth, as well as China retail, where we continue to invest in the same. The key emerging markets like Turkey, Thailand, Mexico, Brazil, and Korea are also expected to grow on the back of a more normalized market environment post-COVID-19. Growing products such as YUPELRI, Viagra, our thrombosis portfolio, Creon, Amitiza, and Dymista ar e also expected to grow in 2022 and lend strength and stability to the business in the respective geographies.
Continue ramping up of our market share of interchangeable Semglee to mid- to- high teens in 2022, building off our successful launch, and by maintaining our leadership in Wixela and Xulane. At the same time, dynamic market conditions are an inherent part of our business, and our job is to perform in this ever-evolving environment. 2022 is going to be no different. We expect mid-single-digit pace business erosion in 2022, largely driven by the continuation of increased competition in certain high-margin key products like Perforomist and Mercazole, continued implementation of China's healthcare policy, the changes in the antiretroviral therapy guidelines, which we expect to continue to drive contraction of the market that has been stable or expanding over the last 10 years. We also expect total revenue to be negatively impacted by lower volumes for COVID-19-related products, mostly in our Emerging Market segment.
In 2022, we'll also face the inflationary impact on input costs on manufacturing operations of our business. Going into more detail regarding our $600 million of expected new product launches in 2022, of which about a third is related to biosimilars. First, I'm excited to highlight that approximately 95% of our new product launches in 2022 and 2023 are already scientifically executed, meaning that they have been either already launched, approved, or are pending approval. Interchangeable insulin glargine, REVLIMID, Restasis, insulin, Insulin Aspart are a few key products in this bucket. While we have not included Symbicort in our 2022 financial guidance, we are happy with the progress on the product and remain ready to launch if the opportunity presents itself in 2022. While I won't go into great detail on the following segment slides, I'll hit on a few highlights.
In developed markets, we expect low double-digit growth, primarily driven by strong performance of Europe. In Europe, we expect to continue to see strong growth driven by our thrombosis portfolio, Creon, and Influvac, along with the robust new generic launches like REVLIMID and Zytiga. In North America, our balanced portfolio of branded complex generics, injectables, and retail generics, as well as our robust product launches, will help us partially offset the inherent erosion in the market, as well as competition and lower EpiPen volumes coming off COVID-19 demand in 2021. YUPELRI will be one of the key contributors to offset this. In emerging markets, we expect to see a year-over-year decline entirely driven by impact of lower COVID-19 product-related volumes. In Japan, we expect strong volume growth from our key brands like Amitiza, Lipacreon, and Effexor, as well as continued success in building our authorized generics.
We also expect common price regulations to have an increased impact, resulting in a high single-digit decline year-over-year. Our strong and well-established commercial presence in the Hospital segment in China will support us as we continue to navigate the evolution of the healthcare policy. At the same time, we are confident in the macro drivers of China, supported by growth in the healthcare consumerism, and therefore are focused on continuing to expand our footprint in Retail segment. To sum up, it's all about execution of our key priorities. We will complete the integration and realize remaining cost synergies. We will deliver the pipeline and expand our robust development house to move up the value chain, and we will continue further stabilizing the business. While we take actions to reshape the company, we'll close the biosimilar transaction in the second half of 2022.
We'll start working on the other identified divestment opportunities to continue to unlock value and simplify the portfolio. More importantly, we'll continue leveraging the Global Healthcare Gateway to find value-creating business development opportunities. With this clear execution plan, we will create a simpler, stronger, and more focused company of the future. Now I will turn it over to Sanjeev.
Thank you, Rajiv. We had another excellent quarter and closed out the year on a strong note. It's been incredibly successful first full year for Viatris, and I'm really pleased how two organizations have come together. Our strong financial performance demonstrate the breadth of our global platform. As I reflect on 2021, we delivered on our integration plan, met our financial commitment for deleveraging and dividend, and developed a plan for bold strategic action to reshape our company going forward. Moving to slide 53, we exceeded on November midpoint guidance on total revenue, adjusted EBITDA, and free cash flow. Total revenue was driven by strong performance in Developed Markets, which saw approximately 7% operational growth in Europe, which included the benefit of our thrombosis franchise. In North America, new product revenue was offset by anticipated base business erosion and competition in complex products.
Taking these factors into account, generic price erosion was in line with our expectation. In Japan, the impact from Celebrex and Lyrica LOE totaled approximately $600 million and now is largely behind us as we move into 2022. In Greater China, operational revenue was flat to the prior year as we continue to shift our business to the retail channel. Emerging market revenue was impacted by pressure on ARV business due to new treatment regimens, which were partially offset by the benefit of COVID-related products. Adjusted gross margin came in at 58.7% for the year, driven by strong brand performance and taking into account competition on key products in North America. In 2021, we were able to execute on accelerated integration timeline, which allowed us to capture approximately $500 million in synergies across cost of goods sold in SG&A.
Free cash flow benefited from underlying business performance, working capital optimization initiatives, and low taxes. I'm pleased with the free cash flow generation for the year, which has enabled us to meet on our financial commitment. Slide 54 captures our reported financial results relative to the combined adjusted estimates for the prior year. Slide 55 identifies the driver of free cash flow for the quarter and full year. As we mentioned late last year, we anticipated Q4 2021 free cash flow to be impacted by several factors. These included timing of interest payment, higher CapEx, and anticipated phasing of one-time cash cost. For full year, business performance, working capital benefits, and lower cash taxes absorbed the higher one-time cash cost. These costs are expected to step down in 2022 and 2023 as we complete integration and restructuring activities.
We delivered on our financial commitment and returned approximately $400 million in dividends and paid down over $2 billion in debt. Slide 56 captures key assumptions of the 2022 financial plan. The total revenue estimate assumes base business erosion to be in mid-single-digit range. Foreign exchange has a significant impact on results, given our international exposure, which comprises approximately 70% of our total revenue. Key exposures include the euro and yen, with strong appreciation in the U.S. dollar over second half of 2021 and more recently into 2022. Our financial guidance incorporates approximately 2% headwind on the total revenue and adjusted EBITDA. We expect another strong year for new product revenue across broad range of generic, complex, and biosimilar products. In generics, we expect important launches, including REVLIMID, Restasis, and Sutent. In biosimilars, we are seeing solid uptake of interchangeable version of Semglee.
Our guidance assumes a full year of biosimilars, which is approximately $875 million in total revenue and adjusted EBITDA of approximately $200 million. New product revenue includes approximately $200 million for biosimilars. Slide 57 captures our financial guidance ranges for total revenue, adjusted EBITDA, and free cash flow, and corresponding detail line item metrics. Now turning to revenue build on Slide 58. This bridges the illustrated expected major drivers for 2022 relative to 2021 actuals. Removing the impact of foreign exchange, our year-on-year total revenue is declining by approximately 2%. Base business erosion consists of two buckets. The first is approximately $200 million and is related to expected continued competition on key products, including Miacalcin and Perforomist.
The second captures ex-expected erosion from price deterioration in North America Generics, annual price reset across the Japan product portfolio, and the continuing pressure on ARV business due to new treatment regimens and lower COVID-related products. In the base business, we expect strength across categories in Europe and higher volumes in China. Moving to slide 59. We're expecting inflationary pressures across third-party supply chain for input costs, distribution, and finished goods. We expect adjusted gross margin to be under slight pressure due to competition on key products and erosion of ARV volumes in emerging markets. Through our planned reshaping initiatives between now and 2026, we intend to invest more in R&D to drive our strategy and pipeline towards NCEs and 505(b)(2)s. On commercial side, our financial guidance reflect investment in some segments to build demand generation and in market capabilities. Turning to slide 60.
We expect another strong year for free cash flow generation. Lower restructuring and integration costs will be partially offset by the impact of EpiPen litigation settlement. We expect to broaden implementation of working capital optimization initiatives in receivable and payable areas to continue to benefit us on free cash flow generation. Before I close, a few points on phasing. We expect total revenue and adjusted EBITDA to be slightly higher in the second half due to ramp of new products and normal product seasonality. We estimate free cash flow will be evenly weighted between first half and second half. In general, the second and fourth quarter tend to be lower due to timing of semi-annual interest payments. In closing, we're coming off a strong year and well-positioned for a solid start in 2022.
The estimated proceeds from the Biocon transactions, along with other reshaping initiatives, are expected to strengthen the company and position us for a long-term success.
Well, thank you, Sanjeev. Thank you, Rajiv. As you can tell, we're excited. Bottom line from today, what I really want you to take away from this, everything we presented today, is that the entire company, now that we laid out the strategy, the entire management team is focused on the future of Viatris. We're looking forward to build a company that's simpler, stronger, more focused, that has a portfolio consisting of generics, complex generics, off-patent brands, and increasing innovative growth engine of NCEs and 505(b)(2)s. A company that has significantly enhanced financial flexibility that we can put to use for either share repurchases and/or BD and R&D.
If you look at this, simply put, the years 2022 and 2023 are really years of execution against the commitments that we've made for phase I, the debt pay down, the dividend, the cash flow, the synergies, but also against now all the initiatives that we outlined to set ourselves up properly for success in 2024 and for many years beyond. That's what we're excited about. That's the vision we're laying out today. With that, we're gonna go to a short break, and after the break, we come back, and we look forward to your questions. Thank you.
Good morning, everyone. Thank you for listening in to our investor event. We're gonna move to the Q&A portion now. First question we're gonna take, operator, is Chris Schott from JPMorgan. Thank you.
I just wanted to clarify the strategy a little bit in terms of what triggered this, 'cause it does seem like a bit of a departure from the broader portfolio you were creating with Upjohn. Can you talk a little bit about was this a financial decision? When you look at where your stock's trading today, where valuations for some of these assets are, it just makes financial sense to do this. Was this driven more about something you've seen from the company's performance or changes in the portfolio that you've experienced over the last year or two? I'm just trying to get a sense of a little bit more color on kind of what triggered this whole process.
The second one is more of a clarification on the valuation you're considering for the incremental $4 billion-$6 billion in asset divestitures. I think if I go back to slide 15, it looks like there's $300 million-$500 million of EBITDA tied to these assets. I think that implies then a low double-digit EBITDA multiple on those products. Am I thinking about that valuation range properly? Is that the kinda right ZIP code to think about for valuation there? Any color would be appreciated.
Okay. Chris, we missed the very beginning of your question there. The sound was missing for about 30 seconds.
Let me repeat that then if that works.
Sorry. Yeah. Thank you.
I was just wanting to clarify what triggered, I think, this departure or this divestiture strategy. 'Cause it seems like it's a bit of a departure from kind of the broader portfolio that was created with the original Upjohn-Mylan transaction. I was just trying to figure out, is this, you know, more of a valuation-driven decision as you consider what some of these assets could be worth relative to where Viatris' stock is trading today? Or is this something that, as you've looked at the performance of the business and, you know, as you just had a better chance to understand some of these assets, that it's, I guess more of a, you know, you see more of a need to focus in the portfolio.
Just wondering a little bit about how much of this is strategic versus how much of this is? You know, kind of opportunistic in terms of where valuations are.
Okay. Thank you, Chris, for that. Look, I think what we've done, as we promised to do, is to do a comprehensive strategic review of all of our business. Go through and look, you know, bottom up, and we took our time to do it in 2021. We looked at all the portfolio that we have. Where we wanna move to is very clear. We continue to be a broad-based business. We have generics, we have complex generics, we have, you know, off-patent brands. We wanna add an innovative growth engine to it. Now, as we looked at the biosimilar business, right? I think it's the deal recognizes the value of what we've created, the attractiveness of this business, because we think it is a very attractive valuation that we're getting. It's immediately unlocking value. It's giving us $2 billion immediately in cash upfront.
We continue to be involved in the biosimilar business, just in a different way by having at least 12.9% stake in the future Biocon Biologics with the upside potential that comes with this. We created a company, and that's the strategic element here, that is much better positioned for success by being vertically integrated. We said that's where we see the market going.
Right.
Vertically integrated companies are gonna be the champion in this. There are multiple other benefits, including the unlocking of value and then being able to use that capital as well as the other divestitures to invest in the areas where we wanna move, which is higher margin, more durable NCEs and 505(b)(2)s in addition to the broad base portfolio we already have. I ask maybe Rajiv to give--
Yeah.
Additional color.
No, I would say, Chris, in anything, I would characterize it. It's a continuation of the vision we had or the direction we had, because long back we have said, "Going up the value chain." It's continuing on that path, number one. Number two, when you take a hard look, let's say a couple of years back when you start putting the assets together, you bring in organically several assets. We took a hard look on some products, what products make sense, what products don't make sense. Now we took a hard look on our businesses. We are taking a hard look on our businesses.
We are evaluating what are the must-haves as we go along, what fit in with the long-term strategy, and maybe some other focus player has a more, you know, can put a more value to that. They are much better in somebody else's hands. I think this is how you're going to look into it, is that we took time to look into each and every part, aspect of our business and said, "Okay, how can we unlock the value, and how can we reshape the company for future and set it up where it needs to go?
If I can just add, Michael. Chris, the other thing that, you know, keep in mind, we talked about performance. We're actually coming from a position of strength. If you think about how we performed and including the results we announced earlier today, four quarters of solid performance. Even without these reshaping initiatives, we are on track with our phase I commitments that we talked about in terms of generating over $1 billion of free cash flow in three years. It's actually coming from a position of strength and naturally evolving to where Rajiv and Michael just talked about is the next stage in our journey.
Right. Chris, the second part of your question was on the additional assets. Obviously we're not at this point disclosing what they are for reasons, you know, for integrity of the process, for competitive reasons, et cetera. You know, we'll disclose that as we come closer to it. You know, again, it's driven by the same motivation. It's either unlocking of value. It's a question of is it core or non-core for the future of our business going forward, and does it help us to simplify the business and reduce execution risk and complexity of the business that we have? That's the main motivation behind those assets as well. I think with that, we take the next question now, Bill.
Yeah. Thank you, Chris, for the question. Our next question, operator, we're gonna go to Balaji from Barclays.
Hi. Good morning, everyone. Couple of questions from me. Firstly, on the guidance, as I look at 2022 guidance, I remember, Rajiv, you had called out $6.2 billion as the floor in the last call, and that seems to be the higher end of the range now. What's changed to have this delta, and believe that this includes the biosimilars business as part of 2022? Second, as you look at the therapeutic areas that you're targeting for growth, can you give the current revenue and EBITDA size of these three therapeutic areas today? What would you consider a successful build-out by 2025 for these three therapeutic areas? Thank you.
Okay. Let me maybe start with the question on EBITDA. You know, Sanjeev laid out, I think, the moving pieces, and where we land for 2022. 2023, really we're not giving any targets at the moment because it wouldn't make sense with all the moving pieces. You know, whether, you know, one of the business comes out in the middle of the year or end of the year can have a lot of changes, so we're not giving that. What we did try to do is give you a vision for what would the RemainCo look like after we're done with all of that. Again, that does not include any of the potential BD, any of the R&D that we do, any of the share purchase that we're gonna plan.
It's just a baseline business that we gave going forward. All eyes now really are on the future for us, right? 2022, 2023 we really should think about as execution years, continuing to be committed to our phase I objectives of debt paydown, of dividend growth, of $8 billion in cash flow, of synergies, etc. We continue to commit, absolutely committed to that. Really it's about executing against the initiatives that we have laid out in 2022 and 2023 to build that future for Viatris 2024 and onwards and return this business to growth. That's what it's about. On the three therapeutic areas, look, we were very deliberate on how we picked those. Yes, we have some existing business in them.
Sometimes it's from the generic business, sometimes it's from even the branded business that we can build upon. We picked these areas because they really fit what we, where we wanna go in the future and what. You know, if you look at them, what do they have in common, right? They are of reasonable size. You look at, you know, from ophthalmology to GI, you have market sizes between $27 billion-$56 billion. They are projected to grow in mid-single digits, 4%-6%.
They have m ultiple assets that are developed in phase II and phase III, late-stage assets, the majority of which are developed not by large cap pharma, but by mid and small cap pharma. Accessible to us potentially through the global healthcare gateway. You look at, they're very specialist-driven, so you don't need, you know, a very large primary care sales force to reach them. You can easily build, and we have already in some cases, specialty sales forces that can reach these these doctors. They have not high, but moderate probability of success, not low probability of technical success. They need smaller studies. They're not outcome driven. You go through the list, they all have these common characteristics that we think make it fit very well to the platform that we have and the competitive set that we're gonna have. I don't know, you wanna add anything?
Yeah, I just would say that to your question, for example, GI, we have a pretty good franchise as Europe and some other markets like Japan, Australia and all that. Amitiza for Japan fits in the GI. That's it. It's not about just as how much size they have, it's the presence we have with those in that space. I think that's been one of the consideration, as Michael very well pointed out. Same as the case of ophthalmology, with the Xalatan knowledge we got from Upjohn, I think we have a pretty good understanding of that space commercially.
Yes.
These are some of the factors which we have taken into consideration while picking up these areas.
The first deal that we just announced. Yeah.
Should I take the EBITDA?
Yes, please.
All right. Balaji, on the EBITDA, I tried to explain that on chart 59. What's going on? There are two important factors that are not unique to Viatris, but that's the industry-wide. First is obviously foreign exchange. Our business is 70% international business. As you know, since second half of last year and beginning of this year, dollar has strengthened. You know, key currency that we have is euro and yen. So that all is causing about a 2% headwind on EBITDA, and I showed that in the chart. That's about $120 million. So that's one factor. The second factor is the inflation on the input cost, you know.
This is on the third party supply, whether it's the solvents, all the third party procured APIs, distribution cost, all that is causing an increase in the cost, which is again industry-wide. I tried to clarify that on the chart. That's about $196 million. These factors, again, put together have been considered in coming out with the guidance, where you see the midpoint is at $6 billion.
Okay. Bill, next question, please.
Thank you, guys. Next question, we're gonna go to Elliot. Elliot, go ahead.
Thanks. Good morning. Just first question first, Sanjeev. Point of clarification, just wanted to confirm, in fact, that the contribution from the Biocon biosimilars business is in fact included for the full year of 2022 in terms of your EBITDA guidance. Then can you just give us a little bit of perspective in terms of sort of how to think about the evolution of all these one-time costs over the next couple of years? I guess that, you know, I would have expected more of a step down in 2022 than the roughly, I think $1.4 billion that you talked about.
Obviously, there's some legal settlements in there, but just wondering, you know, how to think about sort of the, you know, the core of that and all these restructuring, integration costs and how those may progress sort of beyond 2022. Then just lastly for Michael, I mean, you know, certainly the market I think is going to endorse your strategy of evolution to more of an NCE 505(b)(2)-based strategy, while not necessarily maybe fully understanding sort of why you chose the therapeutic categories you did. I guess, you know, the increasingly difficult part is to try and figure out sort of you know, what kind of the new baseline is for the company in revenue and EBITDA.
We've got all these moving parts now in terms of, you know, potential asset divestitures and the like. You know, if we want to and need to think about 2023 and beyond, I guess it's just, you know, sort of difficult for us to think about like, okay, you know, what is the year in which the company begins to grow, and what is that number from which the company can grow from? So anything you can say to help clarify that I think would be appreciated. Thanks.
Sure. Sanjeev, you wanna start?
Yeah, sure. Elliot, first, a clarification. Yes, the biosimilar EBITDA and revenues included in the guidance that we gave out today. Then as you pointed out, the transaction is expected to close in the fourth quarter towards the later part, so we're not expecting a big change in the numbers this year, but that is included in the guidance that we came out today. The second point that you talked about on the one-time cost. You do see a reduction in the one-time cost in 2022 as we guided under the guidance. I think the way to think about, Elliot, in the guidance is we're now looking at one-time cost in actually two buckets.
One is cost to achieve with all the restructuring and integration work that is going on. That cost has actually come down in 2022 and will come down will go down in 2023 as we close out these initiatives. That cost is coming down and that's part of the guidance. The other part of the cost is costs in normal course of business, like the litigation settlements, profit shares, those kind of costs. Those will probably remain, move up and down, depending upon, you know, the situation of the year. That's what you see because of the legal settlement, the cost is a little bit higher and reflected in 2022. The big part, the cost to achieve that has come down in 2022, will continue to come down as we finish the restructuring initiative.
The other cost, which is all the other costs which are required to run our business, will probably stabilize to the level that we have in this year's guidance.
Yeah. I think, look, on the longer- term outlook, clearly, Elliot, I mean, you caught it right? We wanna move up the value chain. That's one of the ways we're gonna return to growth, right? That's the intent of what we're trying to do here. I think the best we can do right now is give you a pro forma that we laid out in the presentation, that Sanjiv walked through. The pro forma, what it would look like after we're done with all the strategic initiatives. What we can't give you yet is what we're gonna add to that, right? Our capital allocation priorities are clear. It's either gonna go to R&D, where we try to gradually ramp up our R&D. It's gonna go to business development in the three therapeutic areas.
If you want offline, I can walk you through that more of why these are the ones that we think we're particularly have a path to leadership in. Probably not all three of them, maybe only one of them, but these are the type of areas that we think we have a path to leadership on. That part is missing, and you will see that evolving. Good news is 2022, 2023 are the years of execution, is where we're gonna deliver against that target, and we're gonna, you're gonna see the initiatives come through. Then what I don't wanna forget, Elliot, is also the share repurchases, right? That is clearly the benchmark and one of the important benchmarks. We now have significant financial flexibility to also do share repurchases.
As you know, the board has already authorized the $1 billion share repurchase program. It's gonna be a significant factor for us going forward. I would expect us, you know, after we're done with the $6.5 billion debt reduction, that we then move to an EPS model, right? Because it would make sense with share repurchase having such an important element in our strategy going forward. Okay.
Elliot, next question, could we go to Jason from BofA?
Thanks. Just coming back on the divestitures. I think it sounds like the plan would be to get rid of some of the lower quality, low margin businesses that at multiples that are well above the current blended company multiples. Just wanted to confirm that. Where are you at in terms of the process with these divestitures? It sounds like in order to put out a slide deck like this, presumably you guys are pretty far along to have gotten some line of sight that these valuation multiples are truly attainable. Just kinda get a sense if you have conviction in these numbers and these multiples. Just on the EBITDA, if I could come back to that for a second. I guess the street perceives you guys as guiding to beat based on last year.
Just trying to get a sense of conservatism, 'cause yes, perhaps costs went up, but you had the opportunity to pull forward cost synergies. You got the Restasis going one AG to compete against. Seemingly, you got some benefits as well. Just curious if you can speak to some of the puts and takes to the upside there. Thanks.
Okay. Jason, on EBITDA guidance, as always, we take a balanced view of all the upsides and downsides and give you kind of realistically where we think we're gonna land. Maybe Sanjeev can talk a little bit more about the puts and takes. Rajiv, do you wanna talk about the divestitures a little bit more and the process we went through?
Yeah. No, we went through, as I told, pretty much a bottom-up process about what's core, what's non-core, where the company's heading. Your point, some of these are not, you know, in line with our margins of the company, and some of these are those, you know, businesses with the margins not in that segment. Look, the assumption was that once you focus on these assets, I would call them high- quality assets. I'll say once you focus on, if they are in the player, if they're in the hands of who's focusing on that, there's a different value. We did our work. You're right. We have not only identified, we have done some work to put that value over there. We are pretty much on the way.
Our goal is we should be done with all this by end of 2023.
Just to add, we also included external advisors to help us validate some of the numbers and make sure we got realistic multiples.
That's very important.
Yeah.
Right. Jason, on the EBITDA, I think there's not much to add except that I talked about those two factors, inflation and FX. That's industry-wide. I think the other thing, Jason, to keep in mind is the EBITDA guidance is the EBITDA guidance, and Michael said that and is very balanced in our view with our point to be meeting and exceeding that. I think the other factor that I wanna highlight is the cash flow. We said, we've been saying all along, the phase I commitment is dependent on the cash flow, which is the North Star. We are still on track at these EBITDA levels, still planning to generate over $8 billion on the base business without any of the divestments you talked about that.
Which is sufficient for us to meet our commitment for debt paydown and the dividend and dividend growth.
Okay.
Next question is gonna be Ronny from Bernstein.
Hi, everybody. Thank you for taking the time today and thank you for taking the question. I want to touch on two or three things. First of all, the baseline business. I'm aware that the generic business typically has this kind of a 5% erosion rate, but I was thinking that your international off-brand business is a lot more stable than that. Is the 5% you're giving us just a result of your projection of 2022, or should we just think long term about that international business on existing products as facing a 5% erosion over time? Then, second, you're kind of doing a big shuffle here.
I was kinda under the impression that your strategy was, we have this global presence, we're just gonna license products from small companies and put that on that basis, and that will be our strategy. Now you seem to be kinda shifting this to focus on specific three areas, one of which you would probably pick. Is the old strategy simply not viable? Can we simply not take therapeutic agnostic products and launch them globally using your infrastructure? Following up on that, you began to talk about it, why you're picking the products, the strategies, the areas you're picking. You know, just for us who follow big pharma, those are hyper-competitive areas. Can you just tell us a little bit more granularity why.
Where in those areas you're gonna compete, just because otherwise you look like you're just competing with much larger companies with much, much bigger R&D budgets.
Rajiv, why don't you take the first question on the baseline of the erosion?
Yeah, Ronnie, the blended, if I say that if you put all the businesses together, that's where we are saying that blended erosion is around 4% or 5%. That's the 5% we're talking. You are right, generics can have a component of 5%-6%, and the LOEs have maybe 3%-4%, not exactly at that level. I'll tell you, I mean, I'm pleasantly surprised by how much we have been able to hold it in one year because of the. I'm not looking at this as an excuse. I think this is going to be a year when we are going to get out there in a normalized way, when our people can get out and all that. There has been some momentum over there.
I would say, roughly, you should look into the brands at about 2%-4%. Japan is a key one where, you know, the price erosion on these brands i s a significant one, and we have that. If you come out of the Japan and go to emerging markets and all that, it's not that much. Once we, I think, bottom out that's one piece. The second one that you were going to--
Yeah, the second was the Global Gateway question.
Before I go to even Gateway, I think, Ronnie, we're not moving away from any business. I think if you see my--
Exactly.
My slides over there on the R&D, we are still honing in on. Look at the generic space, 2022, 2023, 2024, 2025. We have some nice products lined up, whether it's Symbicort, whether it's next year, you know. You know, this year launching REVLIMID, and then going into the complex injectable. Our investments from R&D are complex generics, but then we're moving more into the products like 505(b)(2)s. Like, Copaxone is a good example, once-monthly. We just started a study on the Effexor GAD, you know, general anxiety disorder.
We started a study on YUPELRI, the PHASED study , which is going to help us expand the patient base. We started a study on Xulane Lo dose. These are the products and I think we are picking our spots. We are being very judicious, diligent. Three areas when they come in, I think when you look into the NCEs and all that, you can't be looking into therapeutically agnostic over there. That's where these three therapeutic areas come in. Michael, you may want to build on that.
Yeah, no. I just echo what you said. I mean, Ronny, we're not walking away from anything here. There's absolutely. We're gonna be a company that's balanced, right? That has a balance of generics, complex generics, off-patent brands, and what we're going to add now is this innovative, higher margin, more durable portfolio. That's an add, that's an end, right? If you do that, if you go in that innovative space, you have to do it in a focused way. You cannot build therapeutic area leadership by having you know, being in seven different therapeutic areas. You get benefits from having, you know, commonality of customers, connection with scientific community, development expertise. That's the flywheel we were trying to build here.
As you saw in our slides, we also have still the opportunity for regional deals, strengthening our portfolio, as Rajiv said on the R&D side was, you know, for example, the trial we're doing for generalized anxiety disorder for Effexor in Japan, et cetera. That opportunity still exists, the opportunity for smaller licensing deals complementary to the portfolio we have in the regions or even distribution deals. That opportunity still exists. What we're adding today is that focus towards the higher margin products and the balances that makes going forward for the future and for the long term, after 2024 and many years. Okay.
Thanks.
With that, Bill, next question.
Thanks, Ronnie, for the question. Next is gonna be Eric from Evercore.
Hi, this is Eric speaking. Thanks for taking the time and taking my question. Just the first one on EBITDA. I know we've talked about this a lot, but previously, we've just mentioned a $6.2 billion EBITDA floor. After this transaction for RemainCo, will that EBITDA be flat or growing over time? And then my second question, you mentioned at least 12.9% equity stake, which implies about a $7.7 billion valuation for Biocon Biologics. That's compared to like a $4.9 billion valuation from the stake sold to Serum Institute. Since it's at least 12.9%, does that mean there's room to renegotiate the size of that stake?
Okay. Let me start with the EBITDA question, Eric, and ask Rajiv to comment on the 12.9% valuation question. On the EBITDA look, we're giving you 2022 guidance. We're not giving long-term guidance at the moment because of all the moving pieces. Again, we gave you guidance of what RemainCo would look like absent of any business development deals or other moves that we may be making. I think that's what we put on the table now. Our intent is to move this company to the future beyond 2024, have return to growth and make this, you know, this durable higher margin portfolio. That's where we're shifting it. Whether that growth comes in 2024 or later at this point, I think it's too early to comment on. Rajiv, you can maybe comment on the 12.9%.
Yeah. Eric, actually, let me just start by saying we are flattered by the value which has been assigned or which has been put on our biosimilar business by this, partner or by this third party outside. Every deal, everybody has a different deal, and we have our business. We know the value of our business. We know what we are walking into it. We are. First of all, let's start with what's right for the business. We are setting up this company for success for long time as a vertically integrated company, and we're going to be. You know, equity holder in that company so that we can ride that upside and we can be with them to make them successful and then ride with them. It's value accretive at approximately triple of our current standalone multiples.
Nearly 2/3s of our consideration in immediate cash proceeds. I can go on. Like, you know, it frees up our R&D and capital deployment priorities. It frees up. We are now free to go and deploy where we are going and where we need to invest on. Immediate capital availability, again, from the cash perspective, again, to if we need to invest back in the business or share buybacks and all that. I'm gonna tell you, it's a great deal for us, and we really feel that it's a right logical step. We have set up the company in a right way. I know the space. I've been there now ever since the journey started, 2009
We have several learnings, and we know what it would take to be successful in this space. I think this is the right call, and I'm very happy that I was a part of this journey, and I'm part of this team to make this call.
Thanks, Eric, for the question. Next one, we're gonna go to Nate at Goldman. Go ahead, Nate.
Hi. Good morning. Thanks for taking my question. I guess I just wanted to ask around the growth outlook from new products. I guess you know you said it's $600 million this year. I guess $200 million of that's biosimilars. I think some of the key launches this year are also in the biosimilar space. I guess you know moving forward how do we think about like the cadence of revenue from new products? You know I think you had previously targeted kind of $600 million-$700 million. How does that change as we think about the growth algorithm going forward given the biosimilar divestiture that you announced yesterday as well as the new kind of NCE strategy going forward? Thank you.
Rajiv?
Nate, the cadence should be. You know, in one of my slides, our last slide, I had mentioned $400 million+, excluding biosimilars, the sort of cadence based on what do we have in the pipeline today. It doesn't take into consideration us ramping up the R&D and us having the flexibility to add more into the R&D, investing more in the R&D, investing more into the business development and doing those deals. That's how you should see that.
Thank you, Nate, for the question. Next question, we're gonna go to David Amsellem. Please go ahead.
Okay, thanks. I wanted to get some more granularity regarding your thought process on R&D. I think the target is 9% by 2026. How do you think about that target? I mean, can you talk about how your thought process evolved here? In other words, what are some of the assumptions here? I guess, going forward, with this sort of focus or leaning into brand assets, whether they're NCEs or 505(b)(2) assets, do you have a target in mind in terms of portion of the mix, the product mix, the revenue mix that are brands, say by 2025 or 2026? How do you think about that?
I guess the last piece is, you know, with this brand focus, you know, how much internal R&D capabilities can you bring to bear, in terms of these therapeutic verticals that you're focused on? Thanks.
I'll ask maybe the second question, and then Rajiv, if you can talk about the 9% R&D and how we get to that. David, look, I think what we have to realize that what we did today, what we're announcing today is a significant first step in unlocking value, creating financial flexibility, laying out a clear capital allocation strategy going forward, where we're gonna take that money, whether it's share repurchases, R&D or BD, in the BD and R&D area, being very focused where we wanna move. I think that's about as much as we're comfortable communicating today, right? We have a two-year runway to execute against that, and we'll take you along every step of the way as we go along.
You know, we don't have a fixed portion in mind necessarily going forward, but we know roughly how much we need to do and why we wanna rebalance the portfolio, and you'll see that as we execute over the next two years. Rajiv, maybe you can comment on the 9%.
Yeah, I would say I would take a step back. Look, we have been investing $600 million-$700 million on R&D for the last few years, and every year we have been launching the products worth $600 million-$700 million. It's pretty productive R&D machine. If I have to start from that. As you read 9%, it means we are doubling the R&D. We are going from about $600-$700 to about $1.3-$1.4 billion toward 2026. We are doubling the R&D.
Ned, you should see as a development house where we have all the dosage form capabilities, clinical capabilities, the regulatory capabilities, and we have already executing on many 505(b)(2) opportunities. So that's not an issue. We partner with Theravance to execute YUPELRI, and we know that it, you know, that's where the clinical capabilities we have and try to highlight on that, how many phase II, phase III, phase IV studies we have been part of.
I feel very confident that as we step up R&D, as we bring in the assets now with the late-stage phase II, phase III asset, this machine is set up to execute and take us and help, you know, the Michael laid out the future direction and help us go towards the higher value, higher gross margin, higher, you know, science products. That's how I would see this transition in R&D.
Thanks for the question. Next question, we're gonna go to Greg Fraser, Truist.
Good morning, guys. Thanks for taking the questions. On the China business, what percentage of that business is retail, and how much of the China sales do you expect the retail channel to account for over time? You mentioned intensifying competition in the retail channel. Is that being driven by other multinationals or Chinese companies? To follow up on the additional asset sales that you're considering, are those sales likely to come in one or two larger deals or a series of smaller deals? Any color on that would be helpful. Thank you.
Again, I'll start with the second question. Rajiv, if you can cover the China question.
You go to the second first?
Yeah.
You wanna go for second or you want?
Go for China.
On China, Greg, you should see it as there are three segments. There is a Public Hospital segment. That's where the impact of this healthcare policy is gonna be felt. That's about 40%. That's gonna be about 40% for us. Then there's a 45% sort of retail, and then rest of it is some private hospitals. That's where we are investing. That's where we are spending time. That's where we are expanding the footprint to so that we can offset what we basically going to face in the public hospital. That's how these are the three levers you should see in from China perspective. Yes, as you can anticipate, as focus has been on retail healthcare consumerism, we're seeing both multinational as well as local Chinese companies stepping up the competition, you know.
There is still quite a bit of appreciation for a global brand and the quality, and that's where we distinguish ourselves with many of those local companies.
Greg, on the assets, I mean, all I can tell you is it's a mix. There are several of them. It's not a single one. But I really don't wanna disclose more at this point, again, to preserve the integrity of the process that we are running, as well as, for competitive reasons. You know, just like you saw with the Biocon deal, we're ready to talk about it. We come out, and we'll tell you the complete story. Next question, please.
Yeah, thanks for the question. We're gonna go to Gary from BMO.
Hi, guys. Good morning, and thanks for taking the questions. First, by divesting biosimilars, does that impact the rest of the complex generic portfolio in any way by not having that combined offering for customers under the same roof? I'm curious how you think that dynamic is going to play out. Then Rajiv, I think you mentioned biosimilars are approaching a mature phase. Is that the case? I thought we were just sort of scratching the surface there in terms of biosimilars. You know, how are you thinking about unlocking the value of that business now? Then maybe you could talk about the commercial execution with Semglee and Restasis. How quickly you've been able to get good coverage and penetrate those markets.
Is this in line with expectations as we think of your ability to execute in those areas? Just in terms of the cash from the Biocon transaction, you're gonna be deploying it in a bunch of ways. Just how committed are you to the dividend and growing that dividend as part of the overall mix? Thank you.
Look, we continue to be committed to growing the dividend. We continue to be committed to returning value to shareholders. The board has already authorized a $1 billion share repurchase program. We continue also to be committed to investing in this company and growing it appropriately. The trade-off between all of these is a bit of a case-by-case thing. It's like, as the opportunities come in, right? I mean, you see if you look at the pimecrolimus deal that we just announced, it's a very creative structure. We committed $40 million up front and have no scientific risk really, and have an option at the back end.
Continue to expect us to be creative here and be committed to returning value to shareholders and obviously the dividend, as we said, always for our phase I commitment, we're committed to growing that and delivering that. Rajiv, you wanna comment on the other questions?
Yeah. I think the first question was about would biosimilar divestment impact our, you know, customer reach and all that? Greg, we are still pretty broad portfolio, very deep portfolio, and more importantly, a deep pipeline. Yes, couple of years from now, the biosimilars will not be a part of it, but we're going to continue to add more products so that we are meaningful and, like, always, like we have been for the last two decades, we are partnered to our customers. That focus and that importance of that aspect is not changing.
As far as my comments about the maturity, the, you know, biosimilars moving towards a mature phase, I'm looking at a decade ahead, and I'm looking at journey which biosimilars have covered over the last five, six years, how the market formation, how the, you know, market is evolving from the competitor landscape. Look at just Humira. It's maybe one off, but there are 15 players out there. Look into the just not U.S. as a market, Europe as a market, where the tenders have gone to a point where you can be competing with the even brand at 80%, 90% erosion. When I said it's heading towards or it's heading towards the phase of maturity, I'm taking all that into consideration.
Like we have managed in the last two decades, vertical integration helped us manage that, you know, the similar environment in generics. That's what I saw. This is where exactly we are. If we are looking 10 years ahead, this, we need to be vertically integrated, and this was the right next revolution in the right next spot.
That's why we're so excited about creating this vertically integrated biosimilar champion. Staying involved in it with at least 12.9% stake and being able to participate in the upside on that as well when the IPO happens. We're thrilled about participating in the business in a better setup and in a different and more optimized way.
There was a question on[crosstalk] insulin and Restasis. Yes. We are very much on track. We ended the year at about 4% on that. We are at about 10%, you know, TRX, NRX about 15%. We said we will be mid 15%-20%, somewhere in between mid- to high teens, that's where our this year goal is, and we are very much on the trajectory from the inception point of view.
From successes, I cannot be more pleased. After a decade long slugfest with what we went through with the FDA, we were the first one to bring the product over there. Very proud of the science team again. Yes, the product's upside, we don't see much competition over there. We have one competitor over there as AG. So as long as you know we have that sort of space, we'll make most of it. We are very much on track to meet our numbers on that one.
Great. Thanks for the question. I think we have time for one more. Last question will go to Navann Ty from Citi.
Hi, good morning. Thanks for taking my questions. Could you go through the use and the breakdown of the $3.3 billion proceeds in the near and medium term, given that you have $3.1 billion of bond maturities due this year and next, the $1 billion buyback and other uses of proceeds? Just a second question, for Rajiv. Could you describe your and Viatris involvement in Biocon Biologics in the future?
Okay. Sanjeev, you wanna take the question on the [audio distortion]
Yes. The Biocon deal is immediately accretive and accelerates our phase I commitment. The $2 billion that we expect to get post-tax to the fourth quarter, we're gonna utilize to pay down our short-term maturity. We'll still have cash left at the end of the year, and then obviously additional cash next year. All that would be available, as we talked about earlier, for potential business development or share buyback. Both options would be there. We'll evaluate case by case situation at that time, where to go for one way or the other, or both. That's the overall.
Then when the proceeds come from the IPO, which is earliest Q3 2024 or Q4 2024 beginning, again, that adds to the flexibility about what we talked about in terms of whether that is gonna be BD tuck-in deals or more share buybacks. That's kind of the thing. Immediately, the $2 billion will add to our and accelerate our phase I commitments and provide additional cash for share buyback or BD. Navann, let's just say it's a very complementary deal. We have a huge responsibility for the next two years. We're going to help. You know, my role will be to help it integrate it in a seamless way, bring you know, these businesses, execute for next two years. Nothing should come in the way.
Too, you know, when you are getting into 2024, 2025, make sure how seamlessly we can transfer these capabilities and resources, set up the new company for success, help them in every possible way, as you should expect us to be doing it for the long-term perspective as we are a meaningful stakeholder in that company. I'll do everything possible in my, you know, way to help that.
Okay. Right. Navann, thank you for that question. As I said at the very beginning of today, this is an exciting day for Viatris. An exciting day for our employees. It's an exciting day for shareholders. I think we've laid out for you a very clear path going forward. 2021 really was the year we delivered against the targets we set. We integrated, we synergized, we brought the two companies together, but we also used that time to really lay out, do a thorough strategic review, lay out a path forward. We now have a path that unlocks, you know, up to $9 billion in pre-tax proceeds that we can reinvest, use to return value to shareholders, and/or invest in our business. We clearly laid out to you what we're gonna do in R&D.
We try to lay out to you in BD which areas through the global health engagement we're gonna focus on to add to that innovative growth engine of NCEs and 505(b)(2)s on top of the solid core that we have with generics, complex generics, and off-patent brands. We're excited about the future, and we look forward to keeping you updated as we deliver value to shareholders and provide access to patients. Thank you.