Bristol-Myers Squibb: Showing the Way Back to the Future?
Posted on Mon, Mar 28, 2011 @ 10:55 AM
As anybody who hasn't spent the past 5 years living in a cave would know, things have not been easy for the pharmaceutical industry. The good news is that there are a few life sciences companies that have decided to pursue alternative strategies, resulting in significant successes. I view these alternative strategies as "contrarian" strategies because they go against the "bigger is better" trend that was all the rage back in 2001. These "contrarian" companies decided that they weren't going to spend the next ten years consuming everything in sight, only to wake up one fine day in the year 2011 and realize that they were now too bloated to get out of their own way, and that perhaps it might be time to think about slimming down.
Enter Bristol-Myers Squibb (BMS), which recently announced the FDA approval of Yervoy (ipilimumab), a new treatment for advanced melanoma. BMS has been following a different strategy to its former Big Pharma colleagues, downsizing and selling off non-strategic assets (ConvaTec in 2008; Mead Johnson in 2009) so that it can focus strictly on pharmaceuticals. This strategy has led to the evolution of BMS into what some industry followers now consider to be a mid-sized specialty pharmaceutical company.
The Yervoy approval is a great example of a life sciences company focusing on doing what it does best, and succeeding as a result. BMS has always been a strong player in oncology, and they've now succeeded in getting a significant new cancer drug approved in an area where there have been many failures.
With its strong focus on core specialty disease areas (cancer, diabetes, cardiovascular disease, rheumatoid arthritis and HIV/virology) and its nimbler size compared to other pharmaceutical companies, BMS has some industry analysts singing its praises for having one of the best pipelines in the industry relative to its size.
We're in the midst of an era where the pharmaceutical industry is undergoing a major transition. The story is still being written, but we're starting to gain some interesting insights into the pros and cons of different companies' strategic approaches to managing their businesses and coping with unprecedented change.
One thing is increasingly becoming clear. In today's pharmaceutical industry, smaller, nimbler companies are beautiful.
--David Avitabile