Bristol-Myers Squibb CompanyBMY

Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

Adept at partnerships, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. While the company faces major patent losses beginning in 2011, we expect Bristol's next generation of drugs will fill the patent holes over the Read more

Bulls Say

Bristol's diabetes drug Onglyza exhibits similar attributes as Merck's MRK Januvia, which is approaching $3 billion in annual sales. We expect Onglyza to take market share and grow the diabetes market.

Bristol is planning to cut $2.5 billion in operating costs before the difficult 2011-14 period, when patents will expire on Plavix, Avapro, and Abilify.

Close to half of Bristol's late-stage pipeline focuses on cancer--an indication where the FDA aggressively approves drugs. Cancer drugs also carry strong pricing power.

Most of the company's patent losses occur in primary care indications, which allows the company to drastically cut the related selling and marketing expenses during the drug's loss of exclusivity. Read more

Bears Say

Major patent losses will plague the company starting in 2011, with close to half of the company's top line at risk to generic competition.

Several of Bristol's top drugs sell in crowded markets, creating a Federal Trade Commission concern for possible acquirers. Several potential bidders would likely have to divest a major drug to complete an acquisition of Bristol.

Near-term competition from Lilly's Effient could dramatically cut into Plavix's market share.

The FDA has grown increasingly risk-sensitive to diabetes drugs since side effect concerns were raised about GlaxoSmithKline's GSK diabetes drug Avandia, which may lead to delays or rejections to Bristol's new diabetes drug dapaglifozin. Read more

Strategy

Bristol develops and markets branded pharmaceuticals. In the past, Bristol has had operations in orthopedics, medical imaging, wound care, and other health-care products, but the company has divested Read more

Management

James Cornelius took over as CEO in 2006, following the mishandling of a generic threat to Plavix under the previous CEO Peter Dolan. Cornelius initially took the CEO position on an interim basis. When the position became permanent in 2007, the idea Read more

Profile

Bristol-Myers Squibb discovers, develops, and markets pharmaceuticals for various indications, such as cardiovascular and infectious diseases, cancer, and psychiatric disorders. Read more

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