BMS Accelerates Restructuring with $10.8 Billion Savings to Fuel Strategic Acquisitions

The layoff storm continues.

On April 25, Bristol Myers Squibb (BMS) announced in its Q1 2024 earnings report that it would implement a comprehensive "Strategic Productivity Program," which includes restructuring and optimizing the organizational management structure and product pipeline. This initiative aims to save approximately $1.5 billion by the end of 2025, with an expected workforce reduction of 6%, impacting around 2,200 employees.

BMS Q1 Earnings Report Details This Large-Scale Restructuring Plan — Including Plant Closures and "Pipeline Rationalization." In the statement, BMS CEO Christopher Boerner said, "Our focus remains on strengthening the company's long-term growth prospects. The strategic productivity initiative will make us more agile and prioritize investment in what we believe are the most promising opportunities to deliver the most hopeful drugs to patients as quickly as possible."

In the April 25 conference call, BMS Chief Financial Officer David Elkins noted that "the vast majority" (two-thirds) of cost savings will come from BMS's traditional R&D business, rather than synergistic assets recently acquired. The company stated that, in terms of its investment pipeline, the saved funds will be reinvested into potential blockbuster drugs.

Meanwhile, Bristol Myers’ Chief Medical Officer Samit Hirawat revealed that, so far, BMS has halted or outsourced the development of 12 projects, including the follow-up version of its immunotherapy Yervoy, SIRPα- and BET-targeted drugs, and will continue to review its pipeline for the remainder of this year.

In its restructuring efforts, Bristol-Myers Squibb (BMS) is seeking to optimize its operations by reducing management layers and implementing other cost-cutting measures. Following BMS's $4.8 billion acquisition of Mirati Therapeutics in October last year, the company initiated layoffs earlier this year, planning to cut 423 jobs in San Diego. The recently announced layoffs may have already begun, as reported by BioSpace, with BMS starting to lay off employees on Wednesday. Teams in Washington State, including staff working on the approved CAR-T therapy Breyanzi, are also within the scope of the layoffs.

However, the layoffs will not affect BMS's current product supply. Regarding Breyanzi, which was approved in March this year, the plant in Washington State is already prepared for commercial production. Meanwhile, BMS's facility in Devens, Massachusetts — which began construction in 2021 as BMS’s third commercial CAR-T manufacturing plant in the U.S., adding over 500 jobs — will handle the majority of future commercial cell therapy manufacturing tasks. Additionally, BMS also produces cell therapy products at smaller facilities in Warren and Summit, New Jersey.

BMS's Reorganization of the "Strategic Productivity Program" May Be Related to Its First-Quarter Performance. According to the Q1 financial report, BMS's revenue in the first quarter was $11.9 billion, a year-on-year increase of 5% (+6% after currency adjustment), surpassing market expectations; income from the growth-oriented portfolio was $4.8 billion, an increase of 8% (+11% after currency adjustment).

BMS's short-term growth will be strongly influenced by its two best-selling drugs: the cancer immunotherapy Opdivo (nivolumab) and the anticoagulant Eliquis, co-marketed with Pfizer. According to financial reports, Opdivo sales continued to decline by 6% due to "inventory adjustments and customer order timing" in the U.S., with global revenue reaching nearly $2.1 billion. Eliquis was BMS's top-selling drug in the first quarter, generating $3.72 billion in revenue, a year-over-year increase of 9%, surpassing market expectations. However, it has been included as one of the first 10 drugs subject to price negotiations under the U.S. Inflation Reduction Act (IRA).

The third highest selling drug in Q1 is Revlimid, a treatment for multiple myeloma, with global sales of $1.669 billion. However, it has started to face limited generic competition, as some generics have received temporary approval from the FDA.

Next, let's look at the market performance of BMS's new drugs. According to the financial report, sales of its heart drug Camzyos were $840 million in the first quarter, Sotyktu for psoriasis was $440 million, and cell therapy Abecma was $820 million, "all below analysts' expectations." However, revenues from BMS’s anemia drug Reblozyl and late-stage melanoma treatment Opdualag showed growth.

From the perspective of losses, Bristol-Myers Squibb's (BMS) net loss in the first quarter was $11.9 billion, mainly due to one-time costs related to transactions, including the $14 billion acquisition of neuroscience drugmaker Karuna Therapeutics and expenses from a collaboration agreement with SystImmune, a subsidiary of a Chinese biotech startup. However, excluding these items, its adjusted loss per share was still below market expectations. To address the upcoming losses, BMS has been making acquisitions to restructure its assets, and the newly announced "Strategic Productivity Program" has become part of this effort.

BMS Not Alone in Restructuring Plans. Over the past year, Novartis, Bayer, Pfizer, and Biogen have all announced large-scale layoffs, while Amgen, Gilead Sciences, and Boehringer Ingelheim have implemented smaller workforce reductions.

Layoffs in the biopharmaceutical field are closely related to four major factors: industry cycles and economic environment, strategic adjustments and business focus, R&D investment and return expectations, and industry consolidation and mergers and acquisitions. Layoffs are one of the powerful ways to reduce costs and increase efficiency. By cutting staff and eliminating redundant pipelines, companies can save costs and concentrate resources, which will strongly promote corporate restructuring and transformation.

Looking at biopharmaceutical companies both in China and abroad, apart from the wave of layoffs, BD has become one of the key themes that cannot be ignored. In the past six months, BMS acquired Karuna Therapeutics for $14 billion, Mirati Therapeutics for $5.8 billion, and radiopharmaceutical company RayzeBio for $4.1 billion... actively expanding its existing portfolio through mergers and acquisitions. It is expected that in September this year, the FDA will make an approval decision on KarXT, a late-stage schizophrenia treatment drug acquired from Karuna.

As China's financing environment enters a cyclical downturn, the development of China's biopharmaceutical enterprises may shift from being capital-driven to enterprise-driven. Increased R&D investment by large pharmaceutical companies seeking external BD collaborations will inevitably become one of the key directions for enterprise-driven biopharmaceutical advancement.

In the next few years, blockbuster drugs with leading global sales such as Pembrolizumab (Keytruda), Lenalidomide (Revlimid), and Apixaban (Eliquis) are about to face the patent cliff. On one side, multinational corporations (MNCs) are eager to find promising biotech projects, while on the other side, biotech companies are rushing overseas to seek new development opportunities and markets. This two-way story has already begun.