BMY stock has seen a slight decline from levels of $60 in early January 2021 to around $56 in early November 2024, vs. an increase of about 50% for the S&P 500 over this period.
However, the decrease in BMY stock has been far from consistent. Returns for the stock were 1% in 2021, 15% in 2022, and -29% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that BMY underperformed the S&P in 2021 and 2023.
The U.S. FDA approved Cobenfy for the treatment of Schizophrenia on Sep 26, 2024. This is a big approval for BMS. Cobenfy doesn't have classic side effects as is the case with the other antipsychotic drugs. Cobenfy was being developed by Karuna Therapeutics, which was acquired by BMS earlier this year. The peak annual sales for Cobenfy are expected to be around $8 billion.
Bristol Myers Squibb garnered $11.9 billion in Q3'24 sales, reflecting an 8% rise y-o-y. This can primarily be attributed to higher sales of new drugs, including Reblozyl and Opdualag, which more than offset lower sales of Revlimid. Looking at the bottom line, the company reported an adjusted profit of $1.80 per share, compared to $2.00 in the prior-year quarter.
Bristol Myers Squibb to counter the falling sales of Revlimid, which now faces biosimilar competition, went on an acquisition spree, closing three acquisitions – Mirati Therapeutics, RayzeBio, and Karuna Therapeutics – over the last year or so. It spent around $24 billion combined on these acquisitions.
Eliquis has seen strong growth of late, and it has become the leader in the oral anticoagulants (OAC) market (total prescriptions) in the U.S. amid market share gains. The drug's sales grew sharply from $1.9 billion in 2016 to $12.2 billion in 2023. However, Eliquis sales could start declining from 2025 as it nears its patent expiry, which will likely result in stiff competition from other drugs.
Bristol Myers Squibb, in late 2019, completed the acquisition of Celgene Inc. for $50 per share in cash and one share of Bristol Myers Squibb for each share of Celgene. This translates into a $74 billion transaction value and $90 billion if we include the debt.
Below are key drivers of Bristol Myers Squibb's value that present opportunities for upside or downside to the current Trefis price estimate for the company's stock:
Bristol Myers Squibb is a biopharmaceutical company that discovers, develops, and sells pharmaceutical products globally.
Over the last few years, the company has executed a strategy to transform itself into a core biopharmaceutical company. As a result, it divested its non-pharmaceutical businesses including, Medical Imaging and ConvaTec in 2008, and Mead Johnson in 2009, and acquired Kosan Biosciences in 2008, Medarex in 2009, ZymoGenetics in 2010, Amira Pharmaceuticals in 2011, Inhibitex and Amylin Pharmaceuticals in 2012, and Celgene in 2019.
The company's products primarily include small molecules, which are chemically synthesized drugs, and products from biological processes called biologics. Most of the company's revenues come from products belonging to the following therapeutic classes: oncology, virology, immunology, neuroscience, and cardiovascular. It sold its global anti-diabetics portfolio to AstraZeneca in 2014.
Oncology drugs form the most valuable business segment for Bristol Myers Squibb.
Oncology drugs accounted for 57% of Bristol Myers Squibb's revenue in 2023, making it the biggest therapeutic segment for the company. This can be attributed to the strong uptake of Opdivo sales and the high contribution of Revlimid.
We expect revenue from oncology drugs to see slower growth in the coming years, from $25 billion in 2023 to nearly $27 billion by the end of our forecast period in 2031.
Consequently, the revenue contribution will decline from 57% to around 47% during the same time period. In contrast, we expect most other business segments to grow at a faster pace.
Eliquis has seen stellar growth of late, and it has become the leader in the oral anticoagulants (OAC) market (total prescriptions) in the U.S. amid market share gains. Note that the global anticoagulants market is estimated to grow in the high single-digits over the coming years. Bristol Myers Squibb's Eliquis is one of the key players in this market, and the overall market growth will bode well for drug sales in the coming years. However, we forecast Eliquis sales to start declining from 2025, as it nears its patent expiry, which will likely result in stiff competition from other drugs.
In the pharmaceutical industry, after a patent expires, the use of generics becomes widespread due to the higher cost of patented drugs. This switch to generics causes net sales of the patented drug to fall significantly, and often sharply.
Accordingly, research-based pharmaceutical companies need to continuously invest in R&D to develop and launch new drugs in order to offset these lost sales.
A new drug or regulatory approval for an additional indication of a drug (essentially another use for the drug) provides an opportunity for further top-line growth.
Therefore, a company's drug pipeline is extremely important in order to sustain long-term revenues.
Generic manufacturers do not need to invest in costly and time-consuming drug trials to prove the safety and efficacy of their drugs. They can use the drug trial data of the corresponding patented drug, owned by a research-based pharmaceutical company, to seek regulatory approval for their drug. This allows generic manufacturers to price their products significantly lower in comparison to patented drugs. Thus, after the patent period, generic competition nearly wipes out sales of the patented drug.
Manufacturers of generic products sometimes launch a generic product before the expiry of the applicable patent, leading to patent litigation with the patent-owning pharmaceutical company. A negative outcome for the pharmaceutical company results in significant revenue losses.
Governments around the world have been trying to implement healthcare reform measures, many of which are aimed at reducing the cost of healthcare. Some of this legislation could result in price reductions in the pharmaceutical industry, thus threatening revenue growth.
