Eliquis Will Continue To Drive Bristol-Myers Squibb’s Near Term Earnings Growth

Bristol-Myers Squibb (NYSE:BMY) recently reported its Q1 earnings, and they came in slightly above our estimates, led by margin expansion. This note details the company’s Q1 performance, and Trefis’ forecasts for the full year 2019. You can view our interactive dashboard analysis ~ How Did Bristol-Myers Squibb Fare In Q1, And What Can We Expect From Full Year 2019? for more details on the key drivers of the company’s expected performance.  In addition, you can see more of Healthcare Data here.

How have Bristol-Myers Squibb’s revenues changed over recent quarters, and what’s the forecast for full year 2019?

• Total Revenues for Bristol-Myers Squibb have largely trended higher over recent quarters.
• Revenues grew from $5.2 billion in Q1 2018 to $5.9 billion in Q1 2019.
• The growth can primarily be attributed to a continued uptick in Eliquis and Opdivo sales.
• We estimate the revenues to be $23.7 billion for the full year 2019; a figure 5% higher than 2018.

What are Bristol-Myers Squibb’s key sources of revenue?

• Bristol-Myers Squibb generates its revenues from sales of drugs for several indications in different therapeutic areas, including:
  • Oncology
  • Cardiovascular
  • Virology
  • Immunology
• The company reports its sales under two segments ~ Prioritized Brands, which includes the company’s newer and high growth drugs, and Established Brands, which includes its older franchises, such as Baraclude and Reyataz.
• The company’s near term growth can largely be linked to its blockbuster oncology drug ~ Opdivo ~ and cardiovascular drug ~ Eliquis.

How did Cardiovascular drugs fare in Q1 and how much can it grow in 2019?

• Bristol-Myers Squibb’s cardiovascular drug ~ Eliquis ~ grew 28% from $1.51 billion in Q1 2018 to $1.93 billion in Q1 2019.
• This can be attributed to market share gains. Eliquis is the top OAC (oral anticoagulants) in the U.S., Germany, Canada, and Australia.
• We forecast the revenues to grow in low double-digits for the full year 2019.
• The overall anticoagulants market is also expanding, and Eliquis will likely benefit from the market growth in the coming years.
• The drug does not face biosimilar threat till 2026, when it will lose marketing exclusivity in the U.S.

What to expect from Oncology in 2019?

• Oncology revenues primarily include Opdivo, which saw sales grow from $1.51 billion in Q1 2018 to $1.80 billion in Q1 2019.
• Opdivo is one of the top selling oncology drugs with regulatory approvals for multiple indications, including lung cancer, Hodgkin’s Lymphoma, and head and neck cancer. Given its wide scope to treat multiple indications, it has become one of the top selling immuno-oncology drugs.
• This trend will likely continue in the near term, as Opdivo looks to increase its market share in the immuno-oncology drugs market.
• However, the drug’s medium to long term growth will largely depend on its future approvals for additional indications.

What will be the impact of the above on Bristol-Myers Squibb’s EPS?

• Bristol-Myers Squibb’s Q1 earnings were $1.10 per share, as compared to our estimate of $1.05.
• This beat was led by better than expected margins.
• Adjusted net income margin of 30.5% in Q1 reflected a 70 bps improvement over Q1 2018. However, we expect a slight decline in margins for the full year, given the company’s focus on its drug pipeline.
• We expect the full year earnings to be $4.15 per share in 2019. This reflects 4% growth to the prior year.
• The growth in earnings will likely be led by higher revenues and lower share count.

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