Unveiling the Fall of BMS: A Cautionary Tale for Pharma Giants and Investors

In a stunning turn of events, pharmaceutical giant BMS (Bristol-Myers Squibb), known as 百时美施贵宝 in China, finds itself on the verge of being dethroned. Losing its position in the Top 10 MNC (Multinational Pharmaceutical Companies) by market value at the end of 2022, BMS has been surpassed by competitors such as Pfizer, Sanofi, Gilead Sciences, and Fosun Pharma. With its market value about to drop below $100 billion, BMS now shares a challenging position with GSK. What led to the downfall of this once formidable company, and what lessons can be learned by domestic innovative drug companies and investors? Let's delve into the details.

The Pitfalls of BMS:
BMS's decline can be attributed to several factors, including strategic missteps and legal battles. One critical aspect has been its heavy reliance on patent protection within the highly competitive pharmaceutical landscape. BMS, along with other patent assassins like AbbVie, experienced a decline in performance in 2023 due to their overreliance on patent monopolies.

While BMS successfully built a patent jungle in the PD-(L)1, CTLA-4 antibody, and CAR-T fields, their tactical victories in patent disputes couldn't conceal their overall product strategy's failure. Sustaining a leading position in the innovative drug industry requires more than defensive measures; it necessitates an offensive approach.

The O-Drug Missteps:
BMS's troubles began in 2016 when the fate of their PD-1 inhibitor (Opdivo) started to falter. While their stock prices soared by around 130% from 2013 to 2015, the clinical design flaw in BMS's strategy for NSCLC (non-small cell lung cancer) monotherapy caused a significant setback. By not restricting PD-L1 expression levels, BMS aimed to cover a broader patient population, but the absence of a PD-L1 screening process had adverse implications. As a result, they failed to meet clinical endpoints, resulting in a loss of over $30 billion in market value. In contrast, Merck's Keytruda (K-Drug) successfully entered the NSCLC market with a well-executed clinical development plan, focusing on PD-L1-high expressing patients.

The Rise of K-Drug:
As BMS stumbled, Merck's K-Drug began to soar. In 2018, Keytruda's sales surpassed Opdivo's, reaching a staggering $9.9 billion in NSCLC sales in 2021, accounting for 57.6% of Keytruda's total sales. By the end of 2022, Keytruda had obtained nearly 40 global indications, surpassing Opdivo's 24 indications. In the first three quarters of 2023 alone, Keytruda generated sales of $18.4 billion, cementing its position as the undisputed global drug king.

Another contributing factor to Opdivo's defeat was the mishandling of combination therapy strategies. In 2020, BMS attempted to regain ground in NSCLC first-line treatment by combining Opdivo with Yervoy, a CTLA-4 antibody, marking the first approval of a dual immune therapy in the field of lung cancer treatment. However, this strategy came too late and was exaggerated in significance. In contrast, Keytruda took a different path by combining with traditional chemotherapy, which was widely used. Keytruda gained FDA approval in August and October 2018 for first-line treatment in non-squamous and squamous NSCLC, respectively. Regardless of PD-L1 expression levels, Keytruda could be used for all newly diagnosed NSCLC patients, securing a dominant position in this critical market.

The Ripple Effect of Misfortunes:
BMS's misfortunes continued to multiply. In terms of combination therapy, Merck once again took the lead by forging three licensing collaborations in 2022, involving nine ADC (Antibody-Drug Conjugate) projects. The hefty $47 million upfront payment for their flagship drug, SKB264, seemed like a bargain in hindsight. Merck's intention was to extend the lifecycle of Keytruda, recognizing the emerging potential of ADC in combination with IO (immune-oncology) therapies.

The downfall of BMS serves as a cautionary tale for both domestic innovative drug companies and investors. Relying solely on patent protection and defensive strategies is no longer sufficient to maintain a leading position in the pharmaceutical industry. BMS's missteps in clinical development design, combination therapy approaches, and a failure to adapt to market trends paved the way for its decline. As the pharmaceutical landscape evolves, companies must adopt an offensive mindset and pursue innovative approaches to remain competitive. The lessons learned from BMS's story serve as a timely reminder for industry players and investors.