Bristol-Myers Squibb Analysis

This is an analysis of Bristol-Myers Squibb a mid-cap biopharma company that was once a large pharmaceutical company with many different lines of businesses, such as Mead Johnson Nutritionals, ConvaTec, Clairol, et al.

Introduction

Bristol-Myers Squibb is a New York-based pharmaceutical company founded in 1989 from the merger of the Bristol-Myers and Squibb corporations. Since then, BMS has developed into a leading developer, licenser and marketer of pharmaceutical and related health care products for the treatment of a wide range of diseases including cancer, cardiovascular disease, hepatitis, HIV/AIDS, and rheumatoid arthritis. In FY 2010, BMY generated revenues of $19.5B and net earnings of $3.1B.

Bristol-Myers Squibb (NYSE: BMY) is one of the world's largest pharmaceutical companies by total sales and offers treatments for cardiovascular disease, HIV/AIDS, hepatitis, cancer, and rheumatoid arthritis. Cancer treatments in particular represent a major portion of the company's long-term growth potential and have historically been a strong suit of Bristol-Myers Squibb. The company's top three blockbuster drugs (annual sales >$1 billion) are blood thinner Plavix, Abilify for schizophrenia, and Reyataz for HIV. In FY 2010, BMY generated revenues of $19.5B and net earnings of $3.1B.

Analysis of BMS’ Competitive Advantages

The company realigned its strategy a few years ago and sold off all those profitable subsidiaries I mentioned among others. It shrunk from approximately 40k employees to 24k and annual revenue from 21B (2011) to $15B (2014). It has decided to focus on unmet medical needs. The focus is on oncology and rare genetic diseases. The company wants the innovation of a small biopharma, with the global reach or a large pharma and BMS is positioned to do that. Fortune 500 wrote a great article in June 2014 about the strategy realignment of BMS.

The company was a pioneer in HIV research and drug development. It has been instrumental in making HIV now a chronic disease instead of a death sentence. This year BMS decided to sell its HIV portfolio. It has also recently sold its diabetes portfolio for that reason.

Its strengths are:

• Its drug development pipeline and how the information is managed.
• Attracting and retaining good employees. BMS has a good HR strategy, employees are mentioned in the mission statement and HR is an integral part of the business, not just cost center. We the employees know we are special to the company and it’s a special place to work. BMS was the first company I worked for while I was in college and I left after graduation because I couldn’t get in the IT department at the time. I thought every company cared about their employees like BMS. This was 15 years ago and I missed the company ever since and I’m very happy I’m back. Disgruntled employees can damage a company which relies on finding the information first and getting it to market first. Jack Welch States in Winning that HR should be a part of the strategy and BMS has done that.

The major weakness is drugs going generic. Once a patent is filed, the competition is trying to get information on the compound and the clock starts ticking for them to begin making generics. Drug life cycle management is critical to the success of the company. The company was fined in 2003 by the FTC for trying to block generic manufacturers from making three of its top selling drugs.