Bristol Myers Squibb(NYSE: BMY) has had a rough past five years. Its shares are barely in the green, its financial results have been unimpressive, and it has faced important patent cliffs. Most notably, its cancer drug Revlimid, its top-selling product at one point, is now out of patent exclusivity.
Despite that poor showing in recent years, things might be very different for BMS in the next half-decade, but only if it can better handle the headwinds it has experienced. Let's find out how things might develop for the company through 2029.
More patent cliffs on the horizon
In the second quarter, revenue increased by almost 9% year over year to $12.2 billion -- the best top-line growth rate BMS has recorded in about three years:
BMY Revenue (Quarterly YoY Growth) data by YCharts.
The drugmaker's best-selling products in the period were anticoagulant Eliquis and cancer medicine Opdivo; BMS shares the rights to the former medicine with Pfizer. Eliquis' revenue increased by 7% year over year to $3.4 billion. Opdivo's sales of $2.4 billion were up 11% compared to the year-ago period. These two medicines made up 47.6% of the company's total revenue.
Unfortunately, both medicines will lose patent protection by the end of 2029. Once these patent cliffs arrive, revenue will decline. But BMS is already preparing for that eventuality.
Bristol Myers Squibb's plan to bounce back
BMS has earned several brand-new approvals since 2019. Let's consider three of them. Reblozyl treats anemia in patients with beta-thalassemia; it was approved in 2019. Opdualag, a therapy for melanoma, was launched in 2022. Camzyos, also approved in 2022, treats a heart disease. Though none of these provides a significant share of revenue, they're growing their sales rapidly:
Drug | Q2 Revenue | Q2 Growth (YoY) |
|---|---|---|
Reblozyl | $425 million | 82% |
Opdualag | $235 million | 53% |
Camzyos | $139 million | 202% |
YoY= Year over year. Data source: Company financial statements.
These products and other relatively new additions to the company's lineup should continue growing their sales for the next five years. BMS expects more than $25 billion in revenue from its new product portfolio by 2030. It won't stop earning brand-new approvals or label expansions either: BMS boasts 55 compounds across dozens of clinical trials in its pipeline.
One of the drugmaker's promising new products isn't exactly new: It's a subcutaneous version of its crown jewel, Opdivo. BMS expects that this version could target between 65% and 75% of Opdivo's indications in the U.S. It won't reach the same peak, but it should help smooth out the losses the company will incur from Opdivo's patent cliff.
Beyond that, BMS has many other products, some of which will join the company's growing portfolio of new products in the next five years. The healthcare giant has also made several acquisitions to boost its pipeline in recent years.
More reasons to buy the stock
The company's performance should improve compared to the past five years, at least until it hits important patent cliffs toward the end of the decade. And it has the tools to bounce back and perform well after that.
Furthermore, the stock is also a great pick for dividend investors: BMS has increased its payouts every year for 15 years straight. The company is committed to continuing those increases, so expect it to maintain this streak through 2029. The forward dividend yield currently stands at an impressive 5.1%.
The cash payout ratio looks conservative at just under 37%. Bristol Myers Squibb looks like a solid, blue chip dividend stock to buy and hold for the next half-decade, and likely well beyond that.
Should you invest $1,000 in Bristol Myers Squibb right now?
Before you buy stock in Bristol Myers Squibb, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bristol Myers Squibb wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $763,374!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 12, 2024
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Pfizer. The Motley Fool has a disclosure policy.
