Executive Summary / Key Takeaways

• Bristol-Myers Squibb is undergoing a significant transformation, strategically shifting from a legacy portfolio facing patent expirations to a dynamic "Growth Portfolio" and a robust pipeline, aiming for top-tier sustainable growth by the end of the decade.
• The company's Q3 2025 performance showcased strong execution, with total revenues increasing 3% to $12.22 billion and the Growth Portfolio expanding 18% year-over-year, driven by key assets like Opdivo, Reblozyl, Breyanzi, and Camzyos.
• A disciplined approach to capital allocation prioritizes strategic business development, including recent acquisitions and collaborations (e.g., BioNTech , Orbital Therapeutics, Philochem), alongside significant debt reduction and a $2 billion strategic productivity initiative by 2027.
• BMY's pipeline is entering a data-rich period, with numerous pivotal readouts expected in 2025 and 2026 for potential first-in-class or best-in-class medicines across oncology, hematology, immunology, and neuroscience, including milvexian, admilparant, and a broad expansion of Cobenfy.
• Despite near-term headwinds from generic erosion and governmental pricing pressures, BMY's strategic investments in differentiated technologies like CAR T-cell therapies, protein degraders, and radiopharmaceuticals are establishing a strong competitive moat for long-term value creation.

A Century of Innovation: Reshaping for the Future

Bristol-Myers Squibb, a biopharmaceutical stalwart founded in 1887, is in the midst of a profound strategic evolution. The company's core business revolves around the discovery, development, and commercialization of innovative medicines across critical therapeutic areas including oncology, hematology, immunology, cardiovascular, and neuroscience. This transformation is driven by a clear mandate: to combine the scale of a large pharmaceutical enterprise with the agility and innovation focus typically found in biotech, ultimately aiming to deliver transformational medicines and achieve top-tier sustainable growth by the end of the decade.

The company's journey has been marked by significant strategic moves, notably the 2019 acquisition of Celgene (CELG), which laid the groundwork for its current portfolio and subsequent restructuring efforts. More recently, 2024 and 2025 have seen a flurry of targeted acquisitions and collaborations designed to bolster its pipeline and market presence. These include the 2024 acquisitions of Mirati Therapeutics (MRTX) (Krazati, PRMT5 Inhibitor), RayzeBio (radiopharmaceutical platform), and Karuna Therapeutics (KRTX) (Cobenfy for schizophrenia). In 2025, BMY further expanded with 2seventy bio (TSVT) (Abecma rights), a global strategic collaboration with BioNTech (pumitamig bispecific antibody), and the in-licensing of OncoACP3 from Philochem (radiopharmaceutical for prostate cancer). The planned acquisition of Orbital Therapeutics in October 2025 for its preclinical in vivo CAR T-cell therapy and RNA technology platform underscores this aggressive pursuit of external innovation.

Technological Edge: Fueling the Future Pipeline

BMY's strategic pivot is deeply rooted in its commitment to technological differentiation and innovation, which forms a critical competitive moat. The company is actively investing in and advancing several cutting-edge platforms:

• CAR T-cell Therapy: BMY is a leader in this space, with approved products like Breyanzi and Abecma. The planned acquisition of Orbital Therapeutics will add OTX-201, a preclinical in vivo CAR T-cell therapy for autoimmune disease, representing a novel treatment approach that could redefine autoimmune disease treatment. This in vivo approach offers the tangible benefit of potential off-the-shelf administration in a community setting, significantly broadening patient access compared to current ex vivo CAR T-cell therapies which are limited to academic centers. BMY also has an autologous CD19 CAR T with "spectacular data" across lupus, scleroderma, and myositis, and a CD19 allogeneic CAR T in clinical development as an off-the-shelf option.
• Protein Degradation: BMY leverages its deep expertise from drugs like Revlimid and Pomalyst, positioning targeted protein degradation as a priority research platform. The Phase III EXCALIBER study for iberdomide in relapsed/refractory multiple myeloma demonstrated a statistically significant improvement in MRD negativity rates, providing crucial validation for this platform. This technology offers the benefit of potentially addressing solid tumors, with an oral androgen receptor ligand directed degrader in the pipeline.
• Bispecific Antibodies: The collaboration with BioNTech for pumitamig (PD-L1 and VEGF-A bispecific antibody) is a key differentiator. This asset is being evaluated in multiple pivotal trials for solid tumors, including ES-SCLC, NSCLC, and TNBC. The "specificity of delivering the drug to the tumor because of expression of PD-L1" is a key differentiation compared to PD-1 VEGF inhibitors. BMY aims to be "first or second to market across indications" with pumitamig, a critical advantage in competitive IO markets.
• Radiopharmaceutical Therapeutics (RPTs): Through the RayzeBio (RYZB) acquisition and Philochem licensing, BMY is building a robust RPT platform. The company opened a U.S. manufacturing hub capable of delivering RYZ's next-generation RPTs directly to patients within just three days of production, a critical operational advantage given the short shelf life of RPTs. This infrastructure supports RYZ101, currently in Phase III development for gastroenteropancreatic neuroendocrine tumors.

These technological advancements are not merely scientific endeavors; they are foundational to BMY's competitive moat, contributing to higher average selling prices, lower manufacturing costs (through optimized processes), better margins, and a stronger market position in highly specialized and unmet medical need areas. The integration of digital technology and AI across the company further enhances R&D efficiency and organizational agility, supporting faster drug development and market entry.

Competitive Landscape: Navigating a Dynamic Market

Bristol-Myers Squibb operates in a highly competitive biopharmaceutical market, contending with major players like Pfizer (PFE), Johnson & Johnson (JNJ), Merck (MRK), and AbbVie (ABBV), as well as a myriad of smaller biotech firms and generic manufacturers.

BMY's competitive strengths lie in its targeted innovation and leadership in specific therapeutic niches. For instance, in immuno-oncology, BMY is the only company to launch three IO assets (Yervoy, Opdivo, Opdualag), demonstrating a deep understanding of the market and competitive dynamics. Its focus on precision medicine, particularly with its CAR T-cell therapies and protein degraders, allows it to target specific patient populations with potentially superior efficacy. This targeted approach can lead to higher average selling prices and stronger margins in specialized markets.

However, BMY faces significant competitive vulnerabilities, primarily from patent expirations on its legacy portfolio. Generic competition for Eliquis in Europe, Revlimid, Pomalyst/Imnovid, Sprycel, and Abraxane in the U.S., EU, and Japan is materially impacting revenues. This erosion of high-margin legacy products pressures overall profitability and cash flow, making the success of its growth portfolio and pipeline crucial. For example, U.S. revenues for Abecma decreased due to increased competition in BCMA targeted therapies, underscoring the intensity of the market.

Compared to diversified giants like Pfizer (PFE) and Johnson & Johnson (JNJ), BMY's overall scale and revenue diversification may be less robust, potentially leading to lower overall growth rates and financial resilience. Pfizer (PFE), with its broader product range including vaccines, often captures market share more widely. Merck's (MRK) dominance in oncology with Keytruda presents a formidable challenge, though BMY's focus on combination therapies and novel mechanisms like bispecific antibodies aims to differentiate. AbbVie's (ABBV) strong immunology portfolio and cash flow from biologics also highlight the need for BMY to continuously innovate and expand its high-value assets.

BMY's strategy to counter these pressures involves aggressive business development to acquire innovative assets, such as the BioNTech (BNTX) partnership for pumitamig, aiming for a "first or second to market" position in a competitive space. The company is also expanding its field force and educating physicians on the differentiated profiles of new launches like Cobenfy to disrupt entrenched prescribing behaviors, as seen with its performance tracking ahead of other recently launched D2s in schizophrenia.

Financial Performance: A Portfolio in Transition

Bristol-Myers Squibb's financial performance in the first nine months of 2025 reflects a company in active transition, balancing the strong growth of its newer assets against the expected decline of its legacy portfolio. For the three months ended September 30, 2025, total revenues increased 3% year-over-year to $12.22 billion, while year-to-date revenues saw a slight decrease of 1% to $35.69 billion, influenced by the U.S. Medicare Part D redesign.

The Growth Portfolio is the engine of future expansion, demonstrating robust performance. For the nine months ended September 30, 2025, this portfolio generated $19.02 billion in revenue, an impressive 17% increase year-over-year. Key contributors include:

• Opdivo: $7.36 billion in revenue (up 8% year-to-date), driven by strong demand in MSI-high colorectal cancer and first-line non-small cell lung cancer.
• Reblozyl: $1.66 billion in revenue (up 35% year-to-date), annualizing over $2 billion in sales due to strength in MDS-associated anemia.
• Breyanzi: $966 million in revenue (up 100% year-to-date), annualizing over $1 billion, reflecting strong demand and new indication launches.
• Camzyos: $714 million in revenue (up 88% year-to-date), also annualizing over $1 billion, driven by increasing new patient starts in obstructive HCM.
• Cobenfy: A new launch, generated $105 million year-to-date, showing steady growth in schizophrenia.

Conversely, the Legacy Portfolio experienced a 16% decline year-to-date, generating $16.68 billion, primarily due to generic erosion. Eliquis, however, stood out with $10.99 billion in revenue (up 8% year-to-date), benefiting from strong demand and the favorable impact of Medicare Part D redesign. Revlimid sales plummeted 47% year-to-date to $2.35 billion due to generic competition and Medicare Part D impacts.

Profitability metrics reflect the ongoing transition and strategic investments. Gross margin for the nine months ended September 30, 2025, was approximately 73%. Diluted GAAP EPS for the nine months ended September 30, 2025, was $2.93, compared to $4.45 in the prior year. Non-GAAP diluted EPS was $4.89, a significant increase from $0.53 in the prior year, primarily due to lower one-time Acquired IPRD charges and cost savings.

Operational efficiency is a key focus. Selling, General and Administrative expenses decreased by $1.20 billion year-to-date, reflecting cost savings from the strategic productivity initiative. Research and development expenses decreased by $603 million year-to-date, also benefiting from cost savings and lower acquisition-related expenses in 2024, despite higher drug development costs from recent acquisitions in Q3 2025. Amortization of acquired intangible assets decreased substantially by $4.70 billion year-to-date, primarily due to the full amortization of the Revlimid acquired marketed product right in Q4 2024.

Robust Liquidity and Strategic Capital Allocation

BMY maintains a strong financial position, providing ample liquidity and flexibility for its strategic initiatives. As of September 30, 2025, the company held nearly $17 billion in cash, cash equivalents, and marketable securities. Cash flow from operations was robust, reaching $12.18 billion for the nine months ended September 30, 2025, an increase of $1.40 billion compared to the prior year. This was primarily driven by lower expenses and tax payments, partially offset by higher gross-to-net payments.

The company is committed to deleveraging its balance sheet, having paid down $6.7 billion of its $10 billion debt reduction target by the first half of 2026. Capital allocation priorities remain consistent: strategic investments in the growth portfolio and business development, followed by debt reduction, and returning capital to shareholders through dividends. BMY has a long history of dividend payments, with 2025 marking its 93rd consecutive year.

A key strategic initiative is the expanded 2023 Restructuring Plan, which aims to achieve approximately $2 billion in annual cost savings by the end of 2027, with $1 billion expected in 2025. These savings are intended to drop to the bottom line, providing significant financial flexibility to fund growth drivers and future business development.

Outlook and Guidance: A Clear Path Forward

Bristol-Myers Squibb has raised its full-year 2025 revenue guidance to a range of $47.5 billion to $48 billion, an increase of $750 million at the midpoint, reflecting the continued strong performance of its Growth Portfolio. The Legacy Portfolio is expected to decline by 15% to 17% for the year, with Revlimid sales projected at approximately $3 billion. Gross margin guidance remains at approximately 72%, and operating expenses are expected to be around $16.5 billion, incorporating over $1 billion in net savings from productivity initiatives. Other income/expense, net, is now projected at an annual income of approximately $500 million, benefiting from higher royalties and licensing income. The full-year tax rate is anticipated to be around 18%.

Consequently, the non-GAAP EPS guidance for 2025 has been narrowed to $6.40 to $6.60, with the midpoint remaining unchanged, reflecting strong performance offset by acquired IPRD charges and licensing income. Management anticipates that inventory and gross-to-net dynamics will normalize from Q2 2025 onwards, leading to higher revenues in the second half of the year compared to the first half.

The company's pipeline is poised to deliver a wave of catalysts, with 7 new molecular entities and 7 significant life cycle management opportunities expected to read out in the next 12 to 24 months. These include pivotal data for milvexian (acute coronary syndrome, secondary stroke prevention, atrial fibrillation), admilparant (idiopathic pulmonary fibrosis), and mezigdomid (multiple myeloma). BMY also has the potential to introduce 10 new medicines and at least 30 indication expansion opportunities by the end of the decade.

Risks and Challenges: Navigating Headwinds

Despite a clear strategic roadmap, Bristol-Myers Squibb faces several material risks and challenges. The most significant are the ongoing Loss of Exclusivity (LOE) for key legacy products and increasing governmental drug pricing pressures. The Inflation Reduction Act (IRA) has already set a maximum fair price for Eliquis (effective January 1, 2026) and selected Pomalyst for negotiation (beginning 2027), with the potential for more products to be selected, accelerating revenue erosion. State-level actions and the potential for "Most-Favored Nation" pricing further complicate the U.S. pricing landscape.

Intellectual property litigation remains a constant threat, with ongoing patent infringement and invalidity actions across Europe for Eliquis and in the U.S. for Pomalyst and Zeposia. Failure to successfully enforce patent rights could lead to substantial decreases in product revenues from generic competition. The company is also involved in securities litigation and lawsuits challenging the IRA's constitutionality and the 340B drug pricing program. While management believes these matters will not have a material adverse effect on financial position or liquidity, they could impact consolidated results in any one accounting period.

Pipeline execution risk is inherent in the biopharmaceutical industry. While BMY has accelerated several programs, some recent studies (e.g., Camzyos Odyssey, Cobenfy ARISE) did not meet primary endpoints. Although these specific outcomes have a limited impact on the company's long-term growth trajectory, they underscore the challenges of drug development.

Conclusion

Bristol-Myers Squibb is executing a deliberate and comprehensive strategy to transform its business and achieve sustainable, top-tier growth by the end of the decade. The company's Q3 2025 results demonstrate strong commercial execution, particularly within its burgeoning Growth Portfolio, which is effectively offsetting declines in its legacy assets. Strategic capital allocation, marked by targeted acquisitions in cutting-edge areas like CAR T-cell therapy and radiopharmaceuticals, alongside significant cost-saving initiatives, is bolstering financial flexibility and supporting a robust pipeline.

BMY's technological differentiators in protein degradation, bispecific antibodies, and advanced cell therapies are establishing a strong competitive moat, positioning the company for leadership in addressing critical unmet medical needs. While facing formidable competitive pressures from generic erosion and governmental pricing policies, BMY's proactive approach to innovation and operational efficiency provides a clear path forward. The upcoming wave of pivotal data readouts in 2025 and 2026 will be crucial in de-risking the pipeline and providing greater clarity on the company's future growth trajectory, making Bristol-Myers Squibb a compelling investment story for discerning investors focused on long-term value creation.