Bristol-Myers Squibb Co.

Overview Key strengths Key risks Bristol-Myers Squibb Co. has a market-leading position in the high-margin, patent-protected market for prescription drugs, which is relatively insensitive to the business cycle. High product concentration relative to peers, with the top-three products accounting for about 65% of 2022 revenue (26%, 22%, and 18%, respectively), exacerbated by generic competition to Revlimid. Seven blockbuster drugs with leading franchises in hematologic oncology, oncology, cardiology, and immunology. Elevated risk to the company's historically conservative financial policy, given our expectation for limited revenue growth (0%-2% annually) over the next four years (2023-2026), primarily due to declining Revlimid revenue. A conservative financial policy, with leverage expected to generally remain below 1.8x, and strong cash flow generation (even after dividends). Political

...Bristol-Myers Squibb Co. (BMY) is a leading branded pharmaceutical company with good positions in several therapeutic areas. BMY's business benefits from the same high barriers to entry, good pricing power, and strong profitability of other rated Big Pharma peers. The company's scale (2022 revenue of about $46 billion), profitability (EBITDA margins of about 47%), level of investment in research and development (R&D; about 21% of revenue), and substantial free cash flow generation even after dividends, which enables the company to reduce leverage relatively quickly are strengths relative to most Big Pharma peers. Conversely, its high product concentration, with top product (Eliquis) representing about 26% of revenue and the top three (including Revlimid and Opdivo) representing about 65%, is a weakness relative to peers, even with the Eliquis profits being shared roughly 50%/50% with Pfizer Inc. as part of a partnership agreement. Another key weakness we see is revenue growth below that...

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