Eliquis And Opdivo Will Likely Continue To Drive Bristol-Myers Squibb’s Earnings Growth

Bristol-Myers Squibb (NYSE:BMY) continues to see steady top line growth, primarily led by a ramp up in Opdivo and Eliquis’ sales. The company’s Q3 numbers were more or less in line with our estimates, led by a strong growth in these two drugs. Looking forward, we continue to believe that Opdivo and Eliquis will continue to drive the company’s earnings growth in the near term. The company in its recent earnings conference call increased its adjusted EPS guidance to be in the range of $3.80 to $3.90, and we forecast the figure to be in the middle of the range. We have created an interactive dashboard ~ What Will Drive Bristol-Myers Squibb’s Near Term Growth ~ on the company’s expected performance in 2018 and 2019. You can adjust the revenue and margin drivers to see the impact on the company’s earnings, and price estimate.

Expect Eliquis To See Strong Growth In The Near Term

We forecast the Cardiovascular segment, which currently includes only Eliquis, revenues to grow 29% to $6.3 billion in 2018 and close to $6.5 billion by 2019. The drug has seen strong growth of late, and it has become the leader in the oral anticoagulants (OAC) market (total prescriptions) in the U.S., amid market share gains. Note that the global anticoagulants market is estimated to grow in high single digits from $24 billion in 2017 to over $43 billion in 2025, according to a research report. Bristol-Myers Squibb’s Eliquis is one of the key players in this market, and the overall market growth will bode well for the drug sales in the coming years. However, we forecast Eliquis sales to start declining from 2022, as it nears its patent expiry, which will likely result in  stiff competition from other drugs.

Oncology Will Likely See Double Digit Growth In The Near Term While Immunology Could See Mid-High Single Digit Growth In 2018 But Decline Thereafter

The Oncology segment will continue to perform well with revenues estimated to grow in high-teens for the full year. Opdivo is one of the blockbuster drugs in the immuno-oncology space, with estimated sales of over $6 billion in 2018. The drug has been approved for a number of indications, and is currently being tested under different combinations, which if approved could garner more sales in the coming years. Opdivo holds over 30% of the market share in the second-line lung cancer market, and also competes with Merck’s blockbuster drug Keytruda. Note that the peak sales for Opdivo are estimated to be as high as $12 billion, while we estimate the sales to be north of $8 billion by 2023.

Among other segments, we forecast a mid-single digit growth in Immunology revenues, primarily led by Orencia, which is used as the first line of therapy for rheumatoid arthritis. However, Orencia is expected to lose its patent exclusivity in the U.S. next year, and the sales will likely decline amid increased competition. As such, we forecast a high single digit decline in drug sales from 2019.

Overall, Bristol-Myers Squibb’s near term growth can largely be linked to the ramp up in sales of Opdivo and Eliquis. We forecast the EPS for full year 2018 to be around $3.85, which is in the middle of the company’s guided range. Our price estimate of $56 for Bristol-Myers Squibb is at a premium of over 10% to the current market price.

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