Bristol-Myers Squibb(BMY) - 2024 Q4 - Annual Report

Business Overview Bristol-Myers Squibb is a global biopharmaceutical company focused on discovering, developing, and delivering innovative medicines across oncology, hematology, immunology, cardiovascular, and neuroscience - BMS's core strategy is to deliver transformational medicines in key therapeutic areas, aiming to blend large pharma scale with biotech innovation[13] - In 2024, the company completed significant acquisitions of Karuna, RayzeBio, and Mirati to expand its presence in neuroscience and oncology[13][18] Revenue by Region | Region | 2024 Revenue % | 2023 Revenue % | 2022 Revenue % | | :--- | :--- | :--- | :--- | | United States | 71% | 69% | 68% | | International | 27% | 29% | 30% | | Other | 2% | 2% | 2% | | Total Revenues | $48,300M | $45,006M | $46,159M | Products and Intellectual Property BMS's product portfolio is structured into Growth and Legacy segments, heavily relying on patent rights and regulatory exclusivity to protect against generic and biosimilar competition - The company's portfolio is structured into a Growth Portfolio (e.g., Opdivo, Reblozyl, Camzyos) and a Legacy Portfolio (e.g., Eliquis, Revlimid, Pomalyst)[20][22] Estimated Minimum Market Exclusivity Dates | Product | U.S. Exclusivity | EU Exclusivity | Japan Exclusivity | | :--- | :--- | :--- | :--- | | Eliquis | 2028 | ^^ | 2026 | | Opdivo | 2028 | 2030 | 2031 | | Yervoy | 2025 | 2026 | 2025 | | Reblozyl | 2031 | 2030 | ++ | | Camzyos | 2034 | 2034 | ++ | | Zeposia | 2029 | 2034 | ++ | | Revlimid | ^^ | ^^ | ^^ | ^^ See product footnote for more information. Generics have entered or are expected to enter certain markets. ++ Not currently marketed in the region. - For Eliquis, generic manufacturers have begun marketing in certain EU countries while legal proceedings are pending, with U.S. settlements permitting generic launch in 2028 subject to challenges[52] - For Revlimid, volume-limited generic entry has begun in the U.S., with licenses becoming non-volume-limited on January 31, 2026, and generics have already entered the market in the EU and Japan[57] Research and Development BMS's R&D efforts focus on oncology, hematology, immunology, cardiovascular diseases, and neuroscience, with significant investment in a pipeline of over 40 unique assets R&D Expenses | Expense Category | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | R&D Expenses | $11.2B | $9.3B | $9.5B | | Acquired IPRD Expenses | $13.4B | $0.9B | $0.8B | - Acquired IPRD expenses in 2024 included a significant $12.1 billion related to the acquisition of Karuna[65] - The R&D pipeline includes over 40 unique assets across key therapeutic areas, focusing on novel modalities like cell therapies, protein degraders, ADCs, and radiopharmaceuticals[60][68] - Key late-stage assets include arlo-cel (Multiple Myeloma), iberdomide (Multiple Myeloma), milvexian (Cardiovascular), and Cobenfy (Neuroscience), with multiple registrational readouts anticipated through 2025/2026[98] Competition BMS faces intense competition from other global research-based pharmaceutical companies, smaller specialized firms, and generic drug manufacturers - The company competes with other large biopharmaceutical companies, smaller research firms, and generic manufacturers[110] - Immuno-oncology (IO) products, particularly Opdivo, face a highly competitive market with pressure from existing and new IO agents and combination therapies[111] - Upon loss of market exclusivity, BMS typically experiences a major loss of a product's revenue in a very short period due to intense price competition from generics[112] Pricing and Market Access The company's product pricing is subject to significant pressure from government regulations and the negotiating power of large managed care organizations - BMS faces increasing pricing pressure from government regulations, such as the IRA, and the growing consolidation and power of MCOs and PBMs like Optum, CVS Health, and Express Scripts[117] - In many international markets, governments directly control drug pricing and reimbursement, often leading to restricted access, price cuts, and significant delays in bringing new medicines to patients[119] Manufacturing and Quality Assurance BMS operates a global manufacturing network of internal sites and third-party contractors, with complex and highly regulated processes, especially for biologics and cell therapies - BMS operates significant manufacturing facilities in the U.S., Puerto Rico, the Netherlands, Ireland, and Switzerland, with ongoing capital investment to maintain compliance and capacity[136] - The company relies on third-party manufacturers for all or a portion of the active ingredient or drug substance for many key products, including Eliquis, Opdivo, Pomalyst/Imnovid, and Yervoy[137] - BMS is heavily investing in its cell therapy manufacturing network, with facilities in Washington, New Jersey, Massachusetts, Illinois, and the Netherlands to support products like Breyanzi and Abecma[136] Human Capital As of December 31, 2024, BMS employed approximately 34,100 people globally, with a people strategy focused on fostering an inclusive culture to attract and retain diverse talent - As of December 31, 2024, the company had approximately 34,100 employees, with 57% in the U.S. and 43% internationally[147] - The People Strategy is designed to foster an inclusive work environment to attract, develop, and retain a diverse workforce, which is seen as a competitive advantage[148] Risk Factors BMS faces significant risks including intense pricing pressure, dependence on new product development, intellectual property litigation, manufacturing disruptions, and high indebtedness - The Inflation Reduction Act (IRA) poses a significant risk by allowing the government to set prices for key Medicare drugs, with Eliquis selected for 2026 and Pomalyst for 2027[162] - The company's future success is highly dependent on its R&D pipeline, as key products like Eliquis and Opdivo will face declining sales after losing market exclusivity, coupled with a high rate of failure in drug development[165] - BMS faces the risk of losing market exclusivity earlier than expected due to patent litigation, with generic manufacturers already marketing versions of Eliquis in some EU countries despite pending legal challenges[173][174] - Manufacturing and supply chain disruptions are a key risk, especially for complex products like CAR-T cell therapies, which have evolving and expensive manufacturing processes and require a complex chain of custody for patient materials[180][182] - The company has significant indebtedness following the acquisitions of Celgene, MyoKardia, Mirati, Karuna, and RayzeBio, which could reduce financial flexibility[212] Cybersecurity BMS manages cybersecurity risk through a comprehensive program aligned with the NIST framework, overseen by the Audit Committee and the Board of Directors - Cybersecurity is managed as part of the overall enterprise risk management strategy, with oversight from the Audit Committee and the Board, and the program is assessed against the NIST Cybersecurity Framework[226] - The company focuses on managing human risk through employee education and training, as well as third-party supply chain risks through a dedicated risk management program[227][229] - Governance is structured with a CISO who reports to the Executive Vice President, Chief Digital and Technology Officer, and the Audit Committee receives periodic updates on cybersecurity threats and risk management strategies[232][233] Management's Discussion and Analysis (MD&A) This section provides management's analysis of the company's financial performance and condition, highlighting revenue growth, a significant net loss due to IPRD charges, and increased debt Executive Summary In 2024, BMS achieved key regulatory milestones and completed significant acquisitions, leading to revenue growth but a GAAP net loss primarily due to a one-time IPRD charge Financial Metrics | Financial Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $48,300M | $45,006M | | GAAP Diluted (Loss)/EPS | $(4.41) | $3.86 | | Non-GAAP Diluted EPS | $1.15 | $7.51 | - The significant decrease in GAAP EPS was primarily due to a one-time, non-deductible Acquired IPRD charge from the Karuna asset acquisition and the SystImmune collaboration[256] - The Inflation Reduction Act (IRA) is expected to materially impact the business, with HHS announcing the "maximum fair price" for Eliquis effective Jan 1, 2026, and selecting Pomalyst for price negotiation for 2027[258] - The company is executing a strategic productivity initiative, now expanded to deliver approximately $2.0 billion in additional annual cost savings by the end of 2027[270] Results of Operations Total 2024 revenues increased 7% to $48.3 billion, driven by the Growth Portfolio, while total expenses surged 55% due to a $13.4 billion Acquired IPRD charge Portfolio Revenue | Portfolio | 2024 Revenue | % Change vs 2023 | | :--- | :--- | :--- | | Growth Portfolio | $22,563M | 17% | | Legacy Portfolio | $25,737M | 0% | | Total Revenues | $48,300M | 7% | - Key growth drivers included Reblozyl (+76%), Breyanzi (+105%), Camzyos (+161%), and Opdualag (+48%)[280] - Acquired IPRD expense increased dramatically to $13.4 billion in 2024 from $0.9 billion in 2023, mainly due to the $12.1 billion Karuna acquisition charge and an $800 million upfront fee for the SystImmune collaboration[315][316] - Total Gross-to-Net (GTN) adjustments rose to 44% of gross product sales in 2024, up from 40% in 2023, primarily due to a higher government channel mix in the U.S. and pricing pressures[278] Liquidity and Capital Resources BMS's net debt position significantly increased to $38.5 billion at the end of 2024, primarily to fund acquisitions, while cash flow from operations remained robust at $15.2 billion Financial Position | Metric (in millions) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents & marketable securities | $11,179 | $12,644 | | Total Debt (Short & Long-term) | $49,649 | $39,772 | | Net Debt Position | $(38,470) | $(27,128) | - Issued $13.0 billion of new senior unsecured notes in 2024, with proceeds used to partially fund the acquisitions of RayzeBio and Karuna[336][563] Cash Flow | Cash Flow (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Operating Activities | $15,190 | $13,860 | | Investing Activities | $(21,352) | $(2,295) | | Financing Activities | $5,127 | $(9,416) | - The remaining share repurchase capacity under the authorized program was $5.0 billion as of December 31, 2024, with no shares repurchased during 2024[337][598] Critical Accounting Policies Management identifies critical accounting policies requiring significant judgment, including revenue recognition, valuation of intangible assets, and accounting for income taxes and legal contingencies - Revenue recognition is a critical policy due to significant estimates required for GTN adjustments, including charge-backs, Medicaid/Medicare rebates, and returns[360][361] - Valuation of acquired intangible assets and IPRD is complex, requiring significant estimates of future revenues, operating profits, probability of success, and appropriate discount rates[372][374] - Long-lived assets, including goodwill and intangible assets, are reviewed for impairment annually or when triggering events occur, with impairment charges in 2024 totaling $2.9 billion[376] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for the fiscal year ended December 31, 2024, and accompanying detailed notes Consolidated Financial Statements The consolidated financial statements present the company's financial performance and position, reporting total revenues of $48.3 billion and a net loss of $8.9 billion in 2024 Statement of Earnings (in millions) | Statement of Earnings (in millions) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenues | $48,300 | $45,006 | $46,159 | | (Loss)/Earnings Before Income Taxes | $(8,379) | $8,440 | $7,713 | | Net (Loss)/Earnings Attributable to BMS | $(8,948) | $8,025 | $6,327 | Balance Sheet (in millions) | Balance Sheet (in millions) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $92,603 | $95,159 | | Total Liabilities | $76,215 | $65,674 | | Total BMS Shareholders' Equity | $16,335 | $29,430 | Note 2: Revenue This note details the company's revenue, primarily from net product sales, and provides a breakdown of Gross-to-Net (GTN) adjustments, which totaled $36.9 billion in 2024 GTN Adjustments (in millions) | GTN Adjustments (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Gross product sales | $83,671 | $73,679 | | Charge-backs and cash discounts | $(11,510) | $(9,144) | | Medicaid and Medicare rebates | $(16,551) | $(13,411) | | Other rebates, returns, etc. | $(8,832) | $(7,346) | | Total GTN adjustments | $(36,893) | $(29,901) | | Net product sales | $46,778 | $43,778 | - The three largest U.S. wholesalers (McKesson, Cencora, Cardinal Health) accounted for a combined 85% of U.S. gross revenues in 2024[444] Note 3: Alliances BMS has several significant collaboration alliances, with the Pfizer alliance for Eliquis being the largest, involving substantial profit sharing - In 2024, BMS entered into a global strategic collaboration with SystImmune for the co-development of iza-bren, paying an $800 million upfront fee included in Acquired IPRD[463] Pfizer Alliance (Eliquis) - in millions | Pfizer Alliance (Eliquis) - in millions | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues for BMS | $13,333 | $12,206 | | Profit Sharing to Pfizer | $6,419 | $5,833 | - The collaboration with 2seventy bio for Abecma generated U.S. net product sales of $242 million in 2024, with related profit sharing costs of $43 million[473] Note 4: Acquisitions, Divestitures, and Licensing 2024 was a significant year for acquisitions, with BMS acquiring Karuna for $14.0 billion, RayzeBio for $4.1 billion, and Mirati for $4.8 billion, expanding its neuroscience and oncology pipelines - Acquired Karuna for $14.0 billion in an all-cash transaction, accounted for as an asset acquisition, resulting in a $12.1 billion expense to Acquired IPRD[475][476] - Acquired RayzeBio for $4.1 billion in cash, adding $3.7 billion in intangible assets, including $1.7 billion of IPRD and $2.0 billion of R&D technology[479][480][483] - Acquired Mirati for $4.8 billion in cash plus a non-tradeable CVR, adding $4.2 billion in intangible assets, including $3.5 billion of IPRD[484][487] Note 15: Goodwill and Other Intangible Assets As of December 31, 2024, BMS had $21.7 billion in goodwill and $23.3 billion in other intangible assets, recording significant impairment charges totaling $2.9 billion during the year Intangible Assets (in millions) | Intangible Assets (in millions) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Goodwill | $21,719 | $21,169 | | Other intangible assets, net | $23,307 | $27,072 | - Total impairment charges for other intangible assets were $2.9 billion in 2024[589] - Significant 2024 impairments included: $1.4 billion for Augtyro (marketed product), $590 million for alnuctamab (IPRD), and $390 million for another IPRD compound[590][593][594] Note 20: Legal Proceedings and Contingencies BMS is involved in numerous legal proceedings, including ongoing patent litigation for Eliquis in Europe, challenges to the IRA's drug-pricing program, and lawsuits related to Celgene CVRs - BMS is engaged in widespread patent litigation across Europe to defend Eliquis from generic competition prior to patent expiry, with generics already launched in the UK and Finland[633][636] - The company filed a lawsuit challenging the constitutionality of the Inflation Reduction Act's (IRA) drug-pricing program, with an initial unfavorable court decision currently under appeal[648] - BMS is defending against multiple lawsuits related to the Contingent Value Rights (CVRs) from the Celgene merger, which allege the company failed to use "diligent efforts" to meet a key FDA approval milestone[643]