BMS Provides Pipeline Update, Strikes Deal with Allergan

BMS's New Strategic Direction

Bristol-Myers Squibb (U.S.) has provided insights into proposed strategic changes in its corporate outlook. This includes a differentiated business model incorporating a push towards its drug-discovery pipeline, persisting with non-pharma businesses, and establishing itself as a biopharmaceutical major. The firm has set its sights distinctly on 2013 and beyond. The firm has plans to launch five drugs by 2012 from its current late-stage pipeline hopefuls. These include Onglyza (saxagliptin), belatacept, ipilimumab, dapagliflozin, apixaban and brivanib.

String of Pearls Strategy

BMS has indicated that business development is a top priority through inorganic growth. The firm has entered into alliances or established acquisitions in a bid to bolster its late-stage pipeline through 2011–13. In its latest venture, the firm has announced a deal with Allergan to develop and commercialise AGN-209323, an orally administered small molecule in clinical development for neuropathic pain. The drug is currently in Phase II trials. The terms suggest that BMS will receive exclusive worldwide rights to develop, manufacture, and commercialise the product and its backup compounds. Allergan will retain certain rights in terms of indications, namely ophthalmology for products formulated for local delivery to the eye. Allergan will also get an upfront payment of US$40 million and milestone payments of up to US$373 million.

Biopharmaceutical Approach

The firm is to focus on developing its biologics business. Currently, 35% of its development portfolio comes from biologics, including belatacept and ipilimumab. The firm also indicated that 17 compounds were in early development. The future portfolio is set to build on the successes of its Erbitux and Orencia franchise. In its endeavour to establish itself as a biopharma major, BMS will also explore new opportunities in emerging markets—namely Brazil, India, China, Russia, and Turkey—seeking to commercialise its new portfolio in those territories successfully. The firm expects to achieve 15% of biopharma sales from emerging markets with an unspecified long-term schedule.

Outlook and Implications

BMS already has a list of top-five established brands, with Plavix contributing US$6.1 billion annually in worldwide sales. This is followed by Abilify (aripiprazole) at US$2.6 billion, Reyataz (atazanavir) at US$1.4 billion, Avapro (irbesartan) for US$1.3 billion, and Erbitux (cetuximab) at US$700 million. Once Plavix attains patent expiry in 2012, the total contribution from its top-five drugs will halve from US$12.1 billion to US$6 billion. This is the primary reason for the renewed focus on the company's growth strategy. BMS has already indicated that 2013 will be the year when the impact of Plavix's generic versions will be felt—the five potential launches by the firm may not be able to satisfy the revenue void left by Plavix.

The firm's financial guidance for 2013 of achieving US$1.95 earning per share non–generally accepted accounting principle (GAAP)—excluding the potential impact of the U.S. healthcare reforms and the impact of business development activities among others—is optimistic given that the firm has indulged assuming continued robust revenue growth from its top drugs. The string of pearls strategy has successfully bolstered BMS's capability in terms of research and development, with technology platforms from Adnexus, Domantis, and Medarex. The Allergan deal is another addition to the drug pipeline that has potential in a wider indications franchise in the long term.

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