Bristol-Myers Earnings: New Drugs Mitigate Generic Pressure, In Line With Long-Term Expected Trend

Bristol BMY reported first-quarter results largely in line with our projections, and we don’t expect any changes to the firm’s fair value estimate. Just before the earnings release, Bristol also announced the appointment of Chief Commercialization Officer Chris Boerner to the CEO post to replace Giovanni Caforio, who is retiring effective Nov. 1, 2023. Given the high number of ongoing drug launches, we view Boerner’s appointment as a strong strategic fit for Bristol’s leadership. Despite facing one of the more challenging patent cliffs in the industry currently, Bristol is largely executing well to offset generic pressures with new drug launches, which should support the firm’s wide moat. However, we expect flat earnings over the next several years will likely limit the stock’s growth potential.

In the quarter, total sales fell 1% operationally, with generic Revlimid pressures weighing down growth. With Revlimid agreements in place with generic firms to allow for a staggered entry through 2026, Bristol will likely face steady generic pressures over several years. Also, the 2028 patent losses on cancer drug Opdivo and cardiovascular drug Eliquis create longer-term patent concerns.

Despite the generic pressures, Bristol is in the midst of launching an industry-leading number of new products. While Bristol expects growth between 2025 and 2030, we are forecasting declines caused by the patent losses. However, if Bristol can achieve this growth, there is significant upside to our fair value. Recently launched drugs that hold upside include cardiovascular drug Camzyos (strong efficacy data), cancer drug Opdualag (extends the Opdivo franchise), hematology drugs Reblozyl, Abecma, and Breyanzi and immunology drugs Sotyktu (clean side-effect label) and Zeposia (a shaky start, but still has potential). Bristol’s multiple shots at major market opportunities should help address the firm’s long-term patent cliff.