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Bristol-Myers Squibb’s Valuation Is Improving from 2016 Levels

PART:
1 2 3 4 5 6 7 8
Part 2
Bristol-Myers Squibb’s Valuation Is Improving from 2016 Levels PART 2 OF 8

Analyzing Bristol-Myers Squibb’s 2016 Performance

Bristol-Myers Squibb’s 2016 performance

Bristol-Myers Squibb’s top line rose 17% to ~$19.4 billion in 2016, driven by an operational rise of 19% in its revenue and offset by the 2% negative impact of foreign currency.

Analyzing Bristol-Myers Squibb’s 2016 Performance

Analyzing Bristol-Myers Squibb’s 2016 Performance

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The graph above shows Bristol-Myers Squibb’s quarterly revenues over the last two years. Because the company has operations worldwide, it has significant exposure to currency risks.

Segment-wise performance

Let’s take a look at Bristol-Myers Squibb’s business segments.

The Oncology segment emerged as BMY’s largest revenue contributor in 2016, when it contributed nearly 35% of the company’s total revenue. This segment reported a rise of over 62% in 2016 compared to 2015, mainly driven by increased sales of Opdivo, Yervoy, Sprycel, and the new drug Empliciti.

The Virology segment contributed nearly 24.4% of BMY’s total revenue in 2016. Overall, the segment’s revenue fell ~10.5% to $4.7 billion in 2016, compared to $5.3 billion in 2015. The segment reported sales falls for all of its products, including its Hepatitis C franchise, its hepatitis B drug Baraclude, and its HIV drugs Reyataz and Sustiva.

The Immuno-Science segment, which includes Orencia, contributed nearly 11.6% of BMY’s total revenue in 2016, driven by a rise of 20% in Orencia sales to $2.3 billion in 2016 compared to 2015.

The Cardiovascular segment, represented by the drug Eliquis, contributed ~17.2% of BMY’s total revenue in 2016. Eliquis sales rose ~80% to $3.3 billion in 2016, compared to $1.9 billion in 2015, due to wide use and the strength of its prescription trends.

The Neuroscience segment, represented by the drug Abilify, reported a fall of ~83% in Abilify revenue to $128 million following competition in 2016 compared to 2015. Abilify is a trademark of Otsuka Pharmaceutical Co.

The Matured Products segment and all other products showed a 17% fall in revenue to ~$2.1 billion in 2016, compared to $2.6 billion in 2015. This fall was the result of lower sales and increased competition.

We’ll discuss some of the above-mentioned key products separately in the coming articles. To divest risk, investors can consider ETFs such as the SPDR S&P Pharmaceuticals ETF (XPH), which holds ~4% of its total assets in Bristol-Myers Squibb, 5.1% in Allergan (AGN), 4.5% in Pfizer (PFE), and 5.4% in Jazz Pharmaceuticals (JAZZ).

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