Wednesday, April 13, 2022

Despite FTC’s harsh words for biopharma M&A, Bristol Myers CEO Caforio still enthusiastic about dealmaking

Bristol Myers Squibb, expected to be among the big M&A players in the coming years, says it’s prepared to dip into its wallet yet again. While the drugmaker could face tougher antitrust pushback from the Biden administration this time around, executives aren’t concerned just yet.

“I feel there are plenty of opportunities to continue to strengthen our portfolio across all of the areas where we have presence and expertise,” BMS CEO Giovanni Caforio said on a call with analysts last week.

This isn’t the first time Caforio has voiced BMS’ readiness to strike more M&A deals, even after its $74 billion mega deal for Celgene in 2019 and its $13.1 billion buyout of MyoKardia last year. In January, Caforio said BMS had “significant financial flexibility” to pull off midsize bolt-on deals to drive growth in the second half of the 2020s. 

RELATED: JPM: Deal-making still a ‘top priority’ at Bristol Myers as CEO eyes midsize buys

Like other drugmakers, BMS has looked to M&A ahead of patent losses on key meds, including cancer blockbuster Revlimid, the world’s No. 3 drug by worldwide sales in 2020.

But recently, investors and analysts alike have grown more anxious that stronger antitrust scrutiny from the Federal Trade Commission could dampen the M&A appetite in the biopharma industry. 

Concerned about rising drug prices and access, FTC acting Chair Rebecca Kelly Slaughter said last month that the agency plans to take a more “aggressive” approach toward anti-competitive deals. The FTC has raised concerns that pharma consolidation reduces innovation and leads to higher drug prices, but one influential analyst took the opposite stance in a recent note to clients.

RELATED: The top 20 drugs by worldwide sales in 2020 — Revlimid

While BMS will “always take competition issues into account” when it looks to strike new deals, Caforio said Thursday that he doesn’t envision those concerns will limit BMS’ ability to “execute a very differentiated business development strategy.” 

“I actually feel that we’ve demonstrated over and over that when we acquire assets into the company, it’s actually a way of accelerating their development and generating even more value for patients,” Caforio told analysts on the call. 

Meanwhile, some analysts aren’t convinced about BMS’ pipeline prospects, which could prompt calls for M&A. Morgan Stanley analysts downgraded BMS’ stock from overweight to equal weight last week, noting that they’re “uninspired” by the company’s drugs under development. 

RELATED: In wake of biopharma mega buyouts, FTC kicks off review of industry’s deal-making

BMS shares fell nearly 5% following the company’s disappointing first-quarter earnings released on Thursday. 

Sales of the company’s cancer drug Revlimid, which it picked up from Celgene, came in at $2.94 billion during the quarter, roughly $150 million lower than projections. 

Meanwhile, sales of another oncology bellwether, Opdivo, came in at $1.72 billion for the quarter, also around $150 million shy of analysts’ estimates, Reuters reports.

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