Bristol-Myers Squibb is a large pharmaceutical company, though not in the world’s top league in terms of size. It develops and markets pharmaceuticals for various indications, notably cardiovascular and infectious diseases, cancer and immune disorders. BMY has built, during the past years through acquisitions and own developments, a solid portfolio of drugs and a robust pipeline of new products. The company faces significant patent losses between now and 2017, of which some are blockbusters such as the antipsychotic drug (expiring in 2015), and those for several virology drugs (expiring in 2016 and 2017). A number of products are in development phase III, with the market launch starting more or less as from 2017 and onwards. These new product additions are expected to compensate for the lower sale due to the oncoming patent losses.
The key growth driver for Bristol-Myers Squibb is immunotherapy, i.e. cancer drugs that use the body’s own immune system to fight the disease. Several trials with Opdivo, an innovative cancer treatment, will be completed over the next 12-18 months and positive news-flow is expected re this drug. The drug takes a new approach (partly using the body’s own ADN) to treating cancer and represents a multi-billion dollar opportunity for the company. It is expected to generate substantial initial demand once approved. The fact that this a new type of drug and most likely with less and lower side-effects, provides the company with strong pricing power. Arguably, much of the investment case for Bristol-Myers Squibb hinges on the future success of its pipeline. For investors with a multiyear investment horizon and who withstand above average volatility of this Pharma-Stock, BMS offers an attractive risk-reward profile. We view the shares of BMY as a worthwhile addition from the Pharma-Sector to a well-diversified global equity portfolio.