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Bristol-Myers Squibb’s 1Q17 Estimates: Virology Segment

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The Virology segment

The Virology segment is Bristol-Myers Squibb’s (BMY) second-largest revenue contributor. The segment contributes ~25% of the company’s total revenue.

The Virology segment includes drugs used for the treatment of chronic virus diseases and infections, including hepatitis B, hepatitis C, and HIV. Analysts estimate that the segment’s revenue will fall in 1Q17.

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Hepatitis B franchise

The hepatitis B franchise includes the drug Baraclude. Baraclude is an oral antiviral used for the treatment of hepatitis B, and it’s expected to report a fall in revenue in 1Q17 due to the generic competition of entecavir tablets from Teva Pharmaceutical (TEVA).

Hepatitis C franchise

The hepatitis C franchise includes two drugs, Daklinza and Sunvepra. These drugs launched after August 2014, and they contribute over 35% of the segment’s total revenue. The revenues for these drugs are expected to fall in 1Q17 due to competition in international markets.

A few of the drugs used for the treatment of the hepatitis C virus are Harvoni and Sovaldi by Gilead Sciences (GILD), Olysio by Johnson & Johnson (JNJ), and Viekira Pak by AbbVie (ABBV).

HIV franchise

The segment’s HIV franchise includes two drugs: Reyataz and Sustiva. These drugs’ revenues are expected to fall in 1Q17 due to competition and losses of exclusivity.

To divest risk, investors can consider ETFs such as the PowerShares Dynamic Pharmaceuticals ETF (PJP), which holds 4.4% of its total assets in Bristol-Myers Squibb. PJP also holds 5.8% of its total assets in Eli Lilly and Company (LLY), 5.1% of its total assets in Johnson & Johnson, and 5.0% of its total assets in Abbott Laboratories (ABT).

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