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Rumor has it that after a band called "New Yardbirds" was formed in London in 1968, its members took a copy of their first album to a record studio. After listening to some music samples, the label manager gave the following feedback:

With music like this your album will fall like a lead Zeppelin.

Unfazed, band members changed their name to "Led Zeppelin" and never looked back.

When I examine Bristol-Myers Squibb's' (NYSE:BMY) current product portfolio, I kind of get reminded of the Led Zeppelin story. However, since I like both the company and the band, I wish that Bristol's story would have a similar happy ending.

Bristol-Myers's Squibb Top Five Products - $ Billions
ProductMolecule20112012+/-
AbilifyAripiprazole$2.8$2.82%
PlavixClopidogrel$7.1$2.6-64%
ReyatazAtazanavir$1.6$1.5-3%
SustivaEfavirenz$1.5$1.53%
BaracludeEentecavir$1.2$1.416%
Others $7.1$7.89%
Total $21$17.6-17%

Historically, Bristol-Myers drove a majority of its revenue, and earnings, from a few key products. For example, Plavix represented over 33% of its revenues in 2011 and the top five products accounted for 66% of revenue during same year.

Plavix (clopidogrel), a platelet aggregation inhibitor approved for protection against heart attack and stroke that was co-developed and co-marketed with Sanofi-Aventis, lost exclusivity in 2012 and with it $4.4 billion (64%) of its net sales.

In 2012, Bristol-Myers became less dependent on any one single product, however it still derives a significant amount of its revenues from a few key products. Top five products accounted for 56% of total and both Plavix and Abilify, the current lead product, controlled 15% and 16% of BMS revenue, respectively. A reduction of one or more of these products could negatively impact Bristol's net sales, cash flows and earnings.

Well, Plavix sales are expected to continue declining in the foreseeable future and Abilify, an antipsychotic, sales have already started declining, as of Q1-2013, and are forecast to take a dive. The drug, which was developed by Otsuka in Japan and is marketed in partnership with BMS in the U.S. and Europe, will face a U.S. patent expiry in 2014. Furthermore, BMS's right to commercialize the drug in the EU and the U.S. will end in 2014 and 2015, respectively.

(click to enlarge)

In February 2013, Baraclude's composition of matter patent was invalidated by the U.S. district court of Delaware. Originally, Baraclude's patent was scheduled to expire in 2015 but the hepatitis B fighter may start facing generic competition in 2013.

Despite revenue sinking more than $3.4 billion in 2012 (-17%), and the prospects of further decline in 2013 and beyond, BMS' share price is still defying gravity.

And the story does not end, chartists have recently assigned BMS an 88% overall average buy rating and analysts are cheering the stock. So, it seems the majority out there still sees an upside potential in the stock.

(click to enlarge)Barchart Opinion for Briston-Myers Squibb

Source: Barchart Opinion for Bristol-Myers Squibb

I took a quick look at how BMS compares to its peers in terms of Price Earning, Price Sales and Dividend Yield and can discern that BMS does not fare well on any of the ratios analyzed.

Bristol-Myers & Peers
CompanyPEPSYield
Bristol Myers -534.43$76B
Eli Lilly - (NYSE:LLY)132.63.7$58B
Merck - (NYSE:MRK)253.23.5$147B
Pfizer - (NYSE:PFE)203.33.5$195B

I kind of believe in the wisdom of crowds and that the many are smarter than the few. I have recently taken a short call on Forest Labs (FRX), which I thought was justified, and share price continued following a stairway to heaven on rumors that it will get itself acquired. Kind of makes me wonder!

On the other hand, there have been incidences throughout history where crowds experienced momentary lapses of reason, and that brings me back, full circle, to the untold story of Led Zeppelin.

Source: Bristol-Myers Squibb: The Untold Story Of Led Zeppelin