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Analyst Blog

Recently, Bristol-Myers Squibb Company (BMY - Analyst Report) inked a multi-year deal with the research oriented Chinese university Tsinghua, founded in 1911.

Per the terms of the deal, the Chinese University’s school of Life Sciences’ research aimed at identifying and validating candidates in the oncology and immunoscience fields will be financed by Bristol-Myers. Moreover, the partnership will also target other areas such as structural biology research and the science of mapping the 3D protein structure of biological molecular targets.

We believe that by joining hands with the Chinese university, Bristol-Myers has highlighted its intention to focus on high potential emerging markets such as China. We note that Bristol-Myers has been looking to strengthen its foothold in the high potential Chinese market for quite some time.

Towards fulfilling this objective, Bristol-Myers expanded its partnership with the Chinese pharmaceutical company Simcere Pharmaceutical Group last year in the cardiovascular and oncology fields.

Emerging markets represent significant commercial opportunities with factors like pricing pressure in the E.U. and intensifying generic competition affecting sales in large pharmaceutical markets. Bristol-Myers, like many other pharma players, is facing a generic threat on many of its key drugs, including the blockbuster blood thinner Plavix. This will result in significant loss of revenues. Consequently, the focus on emerging markets makes strategic sense for Bristol-Myers.

Bristol-Myers is also looking to combat the generic threat by introducing new products. The company has tasted a great deal of success in this regard in 2011.

Our Recommendation

We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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