What Will Drive Bristol-Myers Squibb’s $42 Billion Revenue In 2020?

Bristol-Myers Squibb’s (NYSE: BMY) revenue grew from $19.4 billion in 2016 to $26.1 billion in 2019, and it is estimated to top $42 billion in 2020. This growth will primarily be driven by its oncology drugs portfolio, which will likely get over a 2x boost in 2020, due to the impact of the Celgene acquisition. Bristol-Myers Squibb’s oncology drugs segment is expected to be the single-biggest revenue driver with $27.7 billion in revenues (66% of total revenues), which is over 3x the size of Cardiovascular, Bristol-Myers Squibb’s second largest business segment, in 2020. Oncology drugs, which includes blockbuster drugs Revlimid and Opdivo, among other drugs, will be the fastest-growing segment – adding $19.2 billion over 2017-20 (90% of the $21.3 billion in incremental revenues). Cardiovascular, which includes Eliquis, will add about $4.1 billion over 2017-20 (19% of the $11.5 billion in incremental revenue), and immunology drugs will add $1.0 billion (5% of incremental revenues). This will likely be offset by an expected decline of $3.0 billion (-14% of incremental revenue) in all other drugs segment. In this analysis, BMY Revenues: How Does Bristol-Myers Squibb Make Money?, we focus on Bristol-Myers Squibb’s business model, its revenue segments, their historical performance, forecast for 2021, and peer comparison, parts of which are highlighted below.

Bristol-Myers Squibb (BMS) 2020 Revenues To Surge After Celgene Acquisition

• BMS’ total revenue grew from $19.4 billion in 2016 to $26.1 billion in 2019.
• This growth was led by growth in three segments, cardiovascular, oncology, and immunology, which benefited from higher sales of Eliquis, Opdivo, and Orencia, respectively. We discuss more in the sections below.
• As we look forward, we expect the revenues to see a sharp jump in 2020, reflecting the impact of Celgene acquisition. Revenues will likely grow to north of $44 billion in 2021.

• BMS’ sales grew at a CAGR of 10.5% between 2016 and 2019.
• This compares with 4.5% CAGR for Johnson & Johnson, (0.7)% for Pfizer, 5.7% for Merck, and 6.6% for Roche.

BMS Has A Large Oncology Drugs Portfolio, Courtesy of Celgene

• BMS’ oncology sales grew from $6.8 billion in 2016 to $13.0 billion in 2019, led by growth in Opdivo, given its positioning in the lucrative lung cancer market.
• We estimate the segment sales to grow to north of $29.0 billion in 2021.
• The estimated surge in 2020 can be attributed to the impact of the Celgene acquisition.
• BMS’ oncology portfolio now includes Revlimid, Pomalyst, and Abraxane from Celgene, which combined could garner sales of over $15 billion in 2020, in our view. This would represent 55% of the total oncology drugs sales for BMS in 2020.
• Opdivo’s growth rate has slowed of late, and this trend could continue, given the stiff competition from Merck’s Keytruda, which has shown better results in recent studies. Opdivo’s future growth largely depends on its further approvals for other indications.

BMS Is Gaining Market Share In Cardiovascular Drugs Market

• BMS’ cardiovascular drugs revenue grew from $3.3 billion in 2016 to $7.9 billion in 2019, and it could grow to $10.0 billion by 2021, in our view.
• The only drug in this segment is Eliquis, which has added over $1 billion in new sales each year since its launch.
• This can be attributed to its increased acceptance among the physicians, which has led to the drug becoming the market leader in novel anticoagulants total prescriptions.
• Eliquis’ patent is protected till 2023, beyond which it will face generic competition. By 2023, the drug sales could peak around $12 billion.

Immunology Portfolio Could See Biosimilar Competition In 2021

• BMS’ immunology drugs portfolio includes another blockbuster drug ~ Orencia ~ which is used for the treatment of rheumatoid arthritis.
• The segment sales grew from $2.3 billion in 2016 to $3.0 billion in 2019, and we estimate it to grow to $3.6 billion in 2021, as any biosimilar over the next year or so could slow the sales growth.
• While Orencia lost one of the patents in 2019, there is no biosimilar currently in the market. Looking beyond 2021, the company’s new drug ~ Ozanimod ~ could be another blockbuster drug with peak sales of over $5 billion, if approved. Currently, the drug is being tested in phase 3 pipeline.

All Other Drugs Sales Will Continue To Decline

• All other drugs, include the company’s virology and mature products. The segment revenues declined from $7.0 billion in 2016 to $2.3 billion in 2018, and we estimate them to be $1.7 billion in 2021.
• This can be attributed to patent expirations of Sustiva, Baraclude, and Reyataz over the last few years.

Impact of Coronavirus

• While the current coronavirus outbreak could result in supply disruptions for several companies, we don’t expect any significant impact on BMS’ total revenue in 2020.
• BMS’ stock has seen a 22% drop since February 1 (through March 19), after the WHO declared a global health emergency. The markets have been on a decline since, amid fears of global recession after the coronavirus outbreak outside of China, and oil price war.
• BMS will likely outperform the broader markets, when the current crisis winds down, given that Eliquis and Revlimid will drive its earnings growth. Even during the 2008-09 crisis, BMS outperformed the broader markets.
• For more detailed charts and a timeline of the 2008 and 2020 crisis for different stocks, view our interactive dashboard analyses on coronavirus.

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