Please ensure Javascript is enabled for purposes of website accessibility

Could This Cancer Drug Developer’s Stock Make You Filthy Rich?

By Prosper Junior Bakiny – May 20, 2020 at 7:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bristol Myers Squibb strengthened its oncology lineup thanks to its acquisition of Celgene, but how well will the pharma giant perform moving forward?

Cancer remains one of the leading causes of death in the world. Thankfully, cancer rates have been declining for the better part of two decades. For instance, between 2001 and 2017, the cancer death rate decreased by an average of 1.5% per year in the U.S., according to the Centers for Disease Control and Prevention (CDC). Pharmaceutical companies that have developed life-changing cancer treatments have played a significant role in the fight against cancer. One such company is none other than Bristol Myers Squibb (BMY 1.83%).

Year to date, shares of this pharma giant are up by 1.1%, compared to a 12% drop for the S&P 500. Looking a bit further back, though, Bristol Myers' performance hasn't been stellar when compared to that of the broader market. For instance, over the past five years, the company's stock has slid by 3.6%, while the S&P 500 is up by 34.5%. There are good reasons to think Bristol Myers can reverse that trend during the next five years (more on that below), but is it reasonable to think this healthcare company could make you filthy rich?

Bristol Myers' portfolio of cancer treatments

Bristol Myers boasts several cancer drugs whose sales are growing at a good clip. First, there's Revlimid, a treatment for multiple myeloma. Bristol Myers got its hands on Revlimid thanks to its acquisition of Celgene in a cash and stock transaction valued at $74 billion; this acquisition closed in November of 2019. During the first quarter, Revlimid was Bristol Myers' best-selling product: The multiple myeloma treatment brought in $2.9 billion in revenue, a 13.1% year-over-year increase. 

Three sets of hands holding a purple cancer ribbon.

Image source: Getty Images.

Pomalyst is another cancer drug Bristol Myers acquired in the Celgene deal. This treatment for multiple myeloma racked up $713 million in revenue during the first quarter, compared to $557 million recorded during the first quarter of 2019. Next on the list of Bristol Myers' top cancer drugs is Opdivo, which treats several types of cancer, including non-small cell lung cancer and skin cancer. During the first quarter, revenue from Opdivo was $1.8 billion, a 2% year-over-year decrease. 

However, it is worth mentioning that Opdivo is still being evaluated for use against many other types of cancer. This drug's sales could start growing again if it picks up more approvals. There are several more cancer drugs in Bristol Myers' lineup, including Sprycel, Yervoy, Abraxane, and Empliciti. And in addition to its rich lineup, the company's pipeline features exciting potential cancer treatments as well. 

For instance, there are ide-cel and liso-cel, two potential blockbuster cancer drugs Bristol Myers picked up when it acquired Celgene. Thanks to its robust lineup of cancer drugs, and its exciting pipeline candidates, Bristol Myers looks well-positioned to continue being a leader in the oncology market.

Competitors

The oncology industry is highly competitive, and Bristol Myers has to contend with several pharma giants in this market. First, there is Johnson & Johnson, which also has an interesting lineup of cancer drugs. Most notably, there is Darzalex, a treatment for multiple myeloma. During the first quarter, Darzalex recorded $937 million in revenue, a 49% year-over-year increase.

Merck is another one of Bristol Myers' competitors in the market for cancer drugs. Merck's Keytruda is approved for an entire suite of cancers, including lung cancer, head cancer, neck cancer, and skin cancer. Keytruda's sales continue growing rapidly. During the first quarter, the cancer treatment recorded $3.3 billion in sales, a 45% increase compared to the year-ago period.

Furthermore, Keytruda is still being evaluated in many more clinical trials and will keep racking up approvals. Even with these challenges, Bristol Myers looks poised to continue growing its top line, thanks in large part to its oncology lineup. According to the research firm Evaluate Pharma, Opdivo and Revlimid will "compete for the top-selling products in the world in 2022," with Pomalyst also set to comfortably crack the top fifty.

Can Bristol Myers make you rich?

Bristol Myers is more than just its lineup of cancer treatments. The company boasts other products such as anticoagulant Eliquis, which will also be one of the best-selling drugs in the world in the next few years, according to Evaluate Pharma. All of these products should help Bristol Myers deliver consistently strong financial results, and I believe the company's stock is a strong buy.

Whether this pharma stock can make you filthy rich is another question, however. That all depends on how much you invest, and what your timeline is. I doubt Bristol Myers could turn a relatively modest sum -- say $1,000 -- into anything that could be considered a fortune within a few years. But investors who put $1,000 of their money in Bristol Myers today will still be glad they did so in five years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$71.65 (1.83%) $1.29
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.77 (1.08%) $0.93
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$166.78 (1.12%) $1.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.