Will New Drugs Enable BMY to Offset the Impact of Generic Competition?

Bristol Myers BMY depends on newer drugs like Opdualag, Reblozyl and Breyanzi to stabilize its revenue base as its legacy drugs face generic competition.

Legacy Portfolio is adversely impacted due to continued generic impact on Revlimid, Pomalyst, Sprycel and Abraxane, as well as the U.S. Medicare Part D redesign effect.

Sales of blood thinner medicine Eliquis were down 4% in the first quarter due to the impact of Medicare Part D redesign in the United States.

In such a scenario, the performance of new drugs is key to BMY’s growth. Thalassemia drug, Reblozyl, has put up a stellar performance, driven by strong growth in the first and second-line treatment of myelodysplastic syndromes (MDS)-associated anemia. The drug should contribute significantly in the coming decade.

Revenue growth has been good for the leading immuno-oncology drug Opdivo, driven primarily by volume growth. Sales of CAR T cell therapy, Breyanzi, also continue to gain traction from the approval of new indications and expanded manufacturing capacity. Camzyos has also witnessed strong global uptake in obstructive HCM.

BMY had earlier won FDA approval for xanomeline and trospium chloride (formerly KarXT), an oral medication for the treatment of schizophrenia, in adults, under the brand name Cobenfy.

The approval broadens BMY’s portfolio. Cobenfy represents the first new pharmacological approach to treating schizophrenia in decades. This drug is expected to contribute meaningfully to BMY’s top line in the coming years.

Competition for BMY’s Key Drugs

Oncology is a key therapeutic area of focus for Bristol Myers, which is developing and delivering transformational medicines in this space.

The immuno-oncology space is dominated by pharma giant Merck’s MRK blockbuster drug Keytruda (pembrolizumab).    

Keytruda is approved for several types of cancer and alone accounts for around 50% of MRK’s pharmaceutical sales. Merck is currently working on different strategies to drive long-term growth of Keytruda.

Pfizer PFE is one of the largest and most successful drugmakers in the field of oncology. It has an innovative oncology product portfolio of antibody-drug conjugates (ADCs), small molecules, bispecifics and other immunotherapies that treat a wide range of cancers, including certain types of breast cancer, genitourinary cancer and hematologic malignancies, as well as certain types of melanoma, gastrointestinal, gynecological and lung cancer.  Pfizer also has oncology biosimilars in its portfolio and markets six of them for cancer.

Last month, Pfizer inked a licensing agreement with 3SBio for the development, manufacturing and commercialization of SSGJ-707, a bispecific antibody targeting PD-1 and VEGF, outside China. BMY is also trying to develop bispecific antibodies.

BMY’s Price Performance, Valuation and Estimates

Shares of Bristol Myers have lost 15% year to date compared with the industry’s decline of 3.4%.

From a valuation standpoint, BMY is trading at a discount to the large-cap pharma industry.  Going by the price/earnings ratio, BMY’s shares currently trade at 7.34x forward earnings, lower than its mean of 8.54x and the large-cap pharma industry’s 14.79X.

The Zacks Consensus Estimate for 2025 and 2026 earnings per share has moved south in the past 60 days.

BMY currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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