Edit Metric
|
||||||||||||||||||||
Details
|
||||||||||||||
Bristol-Myers Squibb Company (BMY)Stock (Drug Manufacturers Industry, Drug Manufacturers - Major Industry, Pharma & Healthcare Industry)
This article is about Bristol-Myers Squibb. For the article on the company with ticker BMS, see Bemis Company (BMS).  Bristol-Myers Squibb (NYSE:BMY) is one of the top ten largest pharmaceutical companies by total sales in the world. In 2007, worldwide sales of pharmaceuticals accounted for 81% of net sales, with the rest coming in roughly equal parts from BMY's Mead Johnson nutritionals and ConvaTec segments. Bristol-Myers Squibb has recently been plagued by losses of market exclusivity, both expected and unexpected. This has caused a substantial drop in sales in two key drugs, Plavix, a blood thinner, and Pravachol, a cholesterol lowering drug. However, sales of other drugs have remained strong, and no other losses of market exclusivity are expected until 2011. Meanwhile BMY continues to develop its strong late-stage pipeline of 6 solid-performing drugs, as well as various other products in earlier stages of development. It also continues to increase R&D spending to levels closer to that of similar-sized competitors like Eli Lilly and Merck, even as it seeks to improve the productivity efficiency of its development processes. Both of these developments will be of central importance to BMY remaining competitive in the market well into the future.
[edit] Corporate OverviewBristol-Myers Squibb is a large New York-based pharmaceutical company founded in 1989 with the merger of the Bristol-Myers and Squibb corporations. Since then BMY has developed into a leading developer, licenser and marketer of pharmaceutical and related health care products for the treatment of a wide range of diseases including cancer, cardiovascular disease, hepatitis, HIV/AIDS, and rheumatoid arthritis. [edit] Business SegmentsBMY's sales revenue is divided amongst three business segments: Pharmaceuticals, Nutritionals, and Other Health Care. Pharmaceuticals represent by far the largest source of revenue for the company, accounting for roughly 81% of net sales in 2007. Sales in the Nutritionals segment contribute another 13% of the company's sales and are carried out through its Mead Johnson business which deals primarily with infant formula and children's nutritionals. Finally, BMY's Other Health Care business segment contributes the remaining 6% of sales, and consists of two businesses: ConvaTec, a provider of ostomy and wound care products and related services; and its Medical Imaging business; however, in late 2007, Bristol-Myers sold its medical imaging business. Key products include:
Most of these products contribute a billion dollars or more in total sales, and are thus important products to watch in terms of growth, clinical trials, or loss of market exclusivity.   [edit] PharmaceuticalsBristol-Myers Squibb is primarily a pharmaceuticals company, offering treatments for cardiovascular disease, HIV/AIDS, hepatitis, cancer, and rheumatoid arthritis. Cancer treatments especially represent a major portion of the long-term growth potential of the company, and have historically been a strong suit of Bristol-Myers Squibb. However, a quick glance at sales figures make it clear that revenues from the pharmaceutical business dropped substantially last year. This was driven largely by the loss of market exclusivity on BMY' key Pravochol medication, as well as a significant loss of market share for BMY' biggest selling drug, Plavix, as a result of generic competition. The resulting drop in sales was in turn tempered by strong sales growth in a number of other key products. Meanwhile BMY continues to introduce new drugs to the market from its hefty development pipeline: last year BMY launched rheumatoid arthritis medication Orencia, as well as Gleevec alternative Sprycel for the treatment of chronic myelogenous leukemia. Both of these new products were internally developed and expected to do well in the coming years, reflecting the strength of BMY' pipeline and strategic foresight in R&D spending. [edit] Nutritionals and Other Health CareThe nutritionals and other health care segments consist of Mead Johson and ConvaTech--is much less dynamic than that of its pharmaceuticals segment, which sees a turnover in its major products once every few years. That said, these divisions have been essential as a steady source of revenue for the company, and have solid potential for future growth, especially in untapped markets like Asia and Latin America. On January 8, 2008, Bristol Myers sold its medical imaging business to the private equity company Avista Capital Partners for $525 million, as part of its effort to focus on its core pharmaceutical pipeline. [edit] Business GrowthBristol-Myers Squibb reported a net income of $661 million in the first quarter, down from $690 million in 2007. Net sales increased by 20 percent to $5.18 billion, of which one-quarter was due to the weaker dollar. A large part of this increase is attributed to surging sales of Plavix, which increased by 39 percent. Although competitor Apotex launched a generic version of the blood thinner in 2007, Apotex pulled out of the market after a legal dispute with the company. A U.S. District Court decision has favored Bristol-Myers, but is being appealed by Apotex. Bristol completed the sale of its medical imaging business for $525 million on January 8, 2008. The company has indicated that it may also sell its wound-care and nutritional businesses. On April 24, Bristol announced that it will file a 20 percent IPO for its Mead Johnson Nutritionals business. In September of 2008, Bristol made a bid to take over the rest of ImClone in a deal worth $4.7 billion at $62 per share, but was rejected by ImClone's chairman and billionaire financer Carl Icahn. ImClone said it received a $70 per share offer from an unnamed suiter. Bristol-Myers already owns 17 percent of ImClone.[1] [edit] RestructuringThe company plans to cut more than 10% of its workforce and close down half of its manufacturing plants in order to cut costs by $1.5 billion annually by 2010. This downsizing is consistent with the cost-cutting measures of many other big pharmaceuticals recently, such as Pfizer and Merck, which also slashed their workforce by more than 10%. [edit] Drug Market Exclusivity and Generic Competition Expected Loss of Patent Dates for Major BMY Drugs. Nowhere is this better illustrated than what happened in 2006 with two of BMY's biggest-selling drugs, Pravochol and Plavix. Pravachol's patent ran out in April 2006 and the results were immediately apparent: after only two quarters, total sales of Pravochol were barely half their levels in 2005. Meanwhile the company is just recovering from a debacle that saw Canadian competitor Apotex introduce a generic competitor to its hugely successful Plavix brand, wresting away majority market share within months despite the fact that BMY's patent on that drug does not expire until 2011. The result was a 9% drop in pharmaceutical revenues from 2005, even though all of the company's other key growth drugs experienced double-digit sales growth in the same period. That said, BMY and partner Sanofi-Aventis succeeded in obtaining a temporary injunction on further sale of the generic product from a US federal court pending a final ruling on the situation in the second half of 2007. Annual sales increased to $4.7 billion, compared to $3.2 billion in 2006. With the expected resolution of the Plavix situation, BMY has some breathing room with regards to market exclusivity: the loss of exclusivity on Pravochol is hopefully the last in a string of patent expirations that BMY has had to deal with in the past few years. Barring an unexpected ruling on Plavix, or similar problems arising with its other products, the company does not face any significant exclusivity losses until at least 2011.
 Bristol-Myers Squibb Company2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] Research and DevelopmentResearch and development is of the utmost importance for pharmaceutical companies like Bristol-Myers Squibb. As explained in the above section on market exclusivity, the vast majority of a new drug's commercial potential is met during the stage in which a single company has exclusive rights to it, i.e. when the company holds a patent. As such, BMY's revenues are fundamentally tied to the ability of its internal research and development teams to produce the big revenue-earners that BMY can claim exclusivity for: drugs like Plavix, Pravochol, or Reyataz. BMY, like other pharmaceutical companies, continues to invest heavily in R&D for new treatments and products, spending $3.3 billion on R&D in 2007, up 10% from 2006. The company now has a strong and varied late-stage pipeline consisting of six drugs in phase III of development which are expected to launch at around the 2010 mark. These include:
Despite the strength of its pipeline, many of its new product introductions are entering markets in which they have to compete with other products that have already been introduced, which carries certain disadvantages. The company is, however, pursuing a strategy of investing in the development of products which address areas of unmet medical need. Other important areas of development include the nascent field of protein-based treatments (biologics), of which Orencia is amongst the first: BMY recently committed nearly a billion dollars to enhance its production capabilities in the area of biologics. In any case, pricing pressures on pharmaceuticals (see below section) as well as escalating costs for advanced research make the development of any and all kinds of drugs less lucrative, and riskier, than before. Strategic management of the pipeline is thus key, which is why BMY is re-examining its operating structure in order to achieve $500 million in production savings by 2007. [edit] Pricing PressuresFor all pharmaceutical companies, government-imposed regulations on prices have substantial impact on sales. Government regulations are especially relevant in the realm of government health programs like Medicare and Medicaid in the U.S. For example, Medicaid has recently imposed access and reimbursement restrictions in some states due to budget constraints, applying a downward pressure on prices. Internationally, greater government involvement in the provision of healthcare means that the government has even greater power to exert downward pressure on pricing (e.g. profit control plans in the UK). Other sources of downward pressure on prices include the prevalence and consolidation of Managed Care Organizations, and the importing of drugs from cheaper international sources (Canada, for example). [edit] Comparison to CompetitorsThe business of pharmaceuticals is highly dynamic and extremely competitive. Close competitors for Bristol-Myers Squibb include Merck (NYSE:MRK), Pfizer(NYSE:PFE), Eli Lilly & Company (NYSE:LLY), AstraZeneca (NYSE:AZN), Sanofi-Aventis (NYSE: SNY) and GlaxoSmithKline (NYSE:GSK). It is important to note that BMY is substantially smaller than all of these competitors in both sales and market capitalization. As such, the key to success for BMY is a strong, well-funded R&D program that has been strategically positioned to maximize efficiency, and produce the drugs that are most likely to generate huge success for the company. In this sense, BMY compares quite favourably to its competitors for a few reasons:
There is a caveat to these facts however:
Overall, Bristol-Myers Squibb's smaller size could play to its advantage, in that it is under far less pressure than its larger competitors to replace the huge blockbuster drugs that have fueled their growth (Pfizer and its immensely successful Lipitor, for example). Its smaller size may also allow it to be more efficient, as is demonstrated by the fact that BMY has one of the highest proportions of sales/employee in the industry.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Edit
History
Bookmark
