Bristol-Myers Squibb Earnings Preview

by Trefis Team
Bristol-Myers Squibb
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Bristol-Myers Squibb‘s (NYSE:BMY) revenue jumped more than 17% in 2016. However, the year-over-year growth is likely to come down drastically as the company announces its Q1 2017 results on April 27. We believe that the ramp up in sales of Eliquis and Opdivo, which was key in driving growth last year, is likely to moderate. While Opdivo nearly tripled its sales in the fourth quarter of 2016 compared to the same period a year ago, we are concerned about its growth in 2017 and beyond. With R&D spending diminishing, and Opdivo’s sales growth becoming uncertain, it becomes hard to see how the company can maintain the momentum it gained last year.

Why Opdivo’s Sales Growth May Slow Down?

There are multiple reasons why we think Opdivo may come under pressure. Opdivo’s Phase 3 clinical trials , which aimed to test its application in the first-line treatment of lung cancer, have failed. Additionally, the company announced that it has stopped pursuing combination therapy involving Opdivo and Yervoy for FDA approval considering the test data. This reduces the drug’s target market and expected peak sales. Also, Opdivo’s lung cancer turf is expected to see greater competition from Roche and Merck this year and beyond. However, on the plus side, we expect Opdivo to increase its penetration in head and neck cancer in the U.S. and in classical Hodgkin’s lymphoma in the EU and Japan.

What May Work Well? 

We think Bristol-Myers Squibb’s new cancer drug Empliciti should ramp up well. For the full year, we expect the drug’s sales to exceed $600-$700 million range. In addition, Eliquis is likely to continue its expansion in the U.S., albeit at a slower rate compared to last year. The market is nearly saturated so even a relatively slower growth for Eliquis will result in prescription share gain. Overall, we think Bristol-Myers Squibb either has to get a breakthrough in first-line treatment of lung cancer (BMS has stated that it will still pursue this area), or it needs one of its research collaborations to create a new drug in some of the potentially profitable therapeutic areas including rare and autoimmune diseases. It is unlikely that any progress will be visible on this front as the company announces its first quarter results.

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