BMY trying to come up for air – The worst of the peers

BMY - Bristol-Myers Squibb

Bristol Myers Squibb is a global specialty biopharmaceutical company focusing on diseases such as oncology, cardiovascular, immunoscience, and hematology. The company’s acquisition of Celgene has further strengthened its position expanding its oncology and immunoscience portfolios.

About 58% of Bristol Myers’ 2019 revenues were derived from the U.S., while 24% from Europe, and 15% from the rest of the world. More than 90% of Bristol Meyers’ total sales are from prioritized brands, which include Revlimid, Opdivo, Eliquis, Orencia, Sprycel, Yervoy, and Imnovid, while established brands like Baraclude and others comprise the rest of the revenues. Celgene’s Revlimid has now become Bristol Myers’ leading brand, while Eliquis and Opdivo continue being its blockbuster drugs. Bristol-Myers’ diverse customers include wholesalers, retail pharmacies, hospitals, government entities, and doctors. The company is known for its portfolio of innovative medicines for serious and life-threatening diseases.

Investment Data

Revenue Growth & Market Exposure

Bristol Myers continues to grow through continuous approvals for new medicines and formulations of currently marketed medicines in major markets. In its recent quarter, Bristol-Myers received approvals for Zeposia in the U.S. for relapsing forms of multiple sclerosis with a best-in-class label. In April, it received FDA approval for Reblozyl to treat anemia. As one of the largest biopharmaceutical companies in the world, Bristol Myers offers drugs in various therapeutic areas. Eliquis, its leading drug, occupies an industry-leading position in the prevention of stroke for patients with atrial fibrillation in the U.S. Bristol Myers is focusing on transforming cancer care across a greater range of tumor types. Its Opdivo, an immunotherapy is a saviour for patients suffering from cancer.

Bristol Myers has several new IO compounds in clinical development and therapies like liso-cel and ide-cel which positions it well for the future. It has also added several promising new drugs like Revlimid with the Celgene buyout. Bristol Myers’ acquisition of Celgene Corporation has resulted in the creation of a leading focused specialty biopharma company well-positioned to address the needs of patients with cancer, inflammatory, immunologic, and cardiovascular disease. Bristol Myers’ substantial R&D supports its extensive pipeline of potential therapies. Deep scientific knowledge, development expertise and manufacturing capabilities are the company’s greatest strengths. 

Bristol-Myers is focusing on developing the next generation of treatment options, such as CAR T therapy, and innovative treatments through new scientific platforms such as biologics, cell therapy and protein homeostasis. It is also leveraging digital innovation to accelerate drug discovery and development, and improve manufacturing. The company has identified ~1000 compounds in its library for potential molecules to treat COVID-19 and is evaluating certain medicines in its portfolio that could be included in near term clinical trials. Bristol-Myers registered a sales growth of 8% YoY, in the first quarter due to COVID-19 related stocking. The company continues to manufacture API without any disruption and has a safety stock of raw materials and finished products readily available. It is expecting FY2020 revenue to range in $40 billion-$42 billion.

Dividends

Bristol Myers’ is a Dividend Starter. The company has paid its dividend for over 25 years and has raised it for ten consecutive years. Its shares sport an annual average dividend yield of 2.9% and a high payout ratio. The company last raised its dividend by 12.5% and has grown its dividend at a rate of 2.4% CAGR in the last three years. Earnings have grown at an impressive 47% CAGR in the last three years. It had implemented a 10% dividend increase and $7 billion accelerated share repurchases in 2019. However, the company has no plans of repurchasing shares in the near term.

Bristol Myers continues to advance the next wave of innovative medicines by investing in its pipeline both organically and through business development activities and continues to build on the success of its other prioritized brands. Its increased focus on biological drugs and immuno-oncology has resulted in the creation of powerful products like Eliquis and Opdivo. Opdivo was minimally impacted by COVID-19 and the company expects significant growth driven by Eliquis in the expanding NOAC class. However, the demand for infused products could be impacted in the second quarter. Revlimid and Pomalyst continued to deliver strong double digit growth of 14% and 29% respectively YoY.

The company ended the quarter with ~$19 billion in cash and marketable securities and net debt balance of $28 billion. It generated nearly $4 billion of operating cash flow in the first quarter. Though Bristol Myers’ debt-load has certainly increased with Celgene’s acquisition, the rich stockpile of blockbuster drugs that came along cannot be ignored. The company is on track on its integration activities and should deliver $2.5 billion in synergies by the end of 2022. 

Bristol Myers is expecting a peak impact of COVID 19 crisis on its business in Q2, 2020, returning to a more stable business environment in Q3 and minimal impact from Q4 2020 onwards. As one of the largest pharma companies, the company stands a good chance to benefit from growing global drug sales and a growing cancer market.

Competition

Bristol Myers competes with leading global medical companies. It faces competition from generic pharmaceuticals and biosimilars. The company suffers from intense price competition from generic forms of the product. Some of the leading competitors are Abbott Laboratories, Pfizer Inc., Roche Inc., Novartis, Merck & Co., Inc., AbbVie Inc, AstraZeneca, etc. Bristol Myers’ large size, extensive resources, and economies of scale are its strong competitive advantages.

BMY vs Drug Manufacturers

Bottom Line

The industry-wide dynamics may create volatility in Bristol-Myers’ business in the short-term. However, the company is well-placed to leverage technology, data and analytics to accelerate its pipeline. Bristol Myers’ diversified product portfolio and promising drug developments make it relatively immune to the impact of COVID-19. The coronavirus has already pushed its new drug studies and launches till the end of the year, but the company’s prioritized brands, diverse and innovative pipeline, and strategic business development should support future growth.

BMY vs INDICES

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DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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