Bristol-Myers Squibb Company (BMY) received some encouraging news when the U.S. Food and Drug Administration (:FDA) cleared a biologics manufacturing facility of the company for producing its rheumatoid arthritis (RA) drug, Orencia. The unit, located in Devens, Massachusetts, is a state-of-the-art bulk biologics manufacturing facility. Approximately 300 people, in various capacities, are employed at the manufacturing unit.
Management at Bristol-Myers stated that the increased manufacturing capacity for Orencia, following the clearance of the new site, will go a long way in meeting the increased demand for the RA drug. We note that the FDA cleared the subcutaneous formulation of Orencia last year. Only the intravenous version was available prior to that. Management also believes that the clearance is perfectly in tune with the pharma major’s focus on biologic therapies.
Prior to the approval of the Devens facility, the biologic therapies at Bristol-Myers were manufactured in the company’s facility at Syracuse, New York and also through third party suppliers. The products were packaged in Manati, Puerto Rico. Bristol-Myers stated that the facility at Syracuse won’t become redundant following the approval of the new facility and would remain a vital cog in Bristol-Myers’ wheel.
Even though positive on the clearance of the new manufacturing facility, we believe that investor focus will remain on the loss of exclusivity of blockbuster blood thinner Plavix in the U.S.-scheduled for May 17, 2012. Bristol-Myers has co-developed Plavix with Sanofi (SNY). The loss of exclusivity is likely to result in substantial revenue losses for Bristol-Myers.
Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions. Apart from acquisitions and partnership deals, Bristol-Myers is looking to introduce new products to augment its product portfolio to combat the generic threat. Bristol-Myers has met with a fair amount of success towards achieving this objective. Many new products were launched/ approved in 2011.
A key action date is coming up at Bristol-Myers later this year when the FDA is scheduled to decide on blood thinner Eliquis, co-developed with Pfizer (PFE), for preventing stroke in patients suffering from atrial fibrillation. Positive news from the FDA will help boost the stock.
Our Recommendation
We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.