Bristol Myers Squibb will cut 6% of its workforce in a restructuring meant to save $1.5 billion in costs by the end of next year.
The layoffs will affect some 2,200 employees, the company said Thursday. It’s also trimming its pipeline of experimental medicines, consolidating its array of offices and laboratories and reducing “third party” spending.
“Our focus remains on strengthening the company’s long-term growth profile,” said company CEO Christopher Boerner, in a statement on the restructuring, which was announced alongside earnings for the first quarter.
Bristol Myers’ growth in the near term will be hampered by looming patent expirations for its two top-selling drugs: the blood thinner Eliquis, which it sells with Pfizer, and the cancer immunotherapy Opdivo. Its third highest-grossing product, the multiple myeloma treatment Revlimid, already faces limited generic competition.
Eliquis is also one of the first 10 drugs the U.S. government has targeted for price negotiations under the Inflation Reduction Act, or IRA.
To prepare for those coming losses, Bristol Myers has been building up its business via acquisitions, striking deals over the past six months to buy Karuna Therapeutics, RayzeBio and Mirati Therapeutics. Those deals have brought in prospective treatments for schizophrenia, a type of neuroendocrine tumor and lung cancer.
“While the IRA has an impact in the middle of the decade, we feel very good about being able to more than compensate for that with a very young and attractive growth profile coming from our … portfolio and the pipeline,” said Boerner, on a conference call with analysts.
The restructuring announced Thursday is another step, designed to prioritize products that Bristol Myers sees as having the highest potential. The company said it plans to reinvest the targeted $1.5 billion in savings in those opportunities.
Two-thirds of the savings is expected to come out of Bristol Myers’ spending on research and development. The company has discontinued 12 programs, including a successor version of its immunotherapy Yervoy, and will continue to review its pipeline through the rest of the year, Samit Hirawat, Bristol Myers’ chief medical officer, said on Thursday’s call.
Bristol Myers isn’t alone among its peers in restructuring. Novartis, Bayer, Pfizer and Biogen have all announced sizable workforce reductions over the past 18 months, while companies like Amgen, Gilead and Boehringer Ingelheim have made smaller cuts.
Many of Bristol Myers’ pharmaceutical peers are also facing patent cliffs for lucrative biologic drugs, while others are adjusting their operations following spinouts of consumer or generic drug divisions.
Bristol Myers’ cuts come after a first quarter during which several of its prized new medicines underperformed. Sales of its heart drug Camzyos, psoriasis pill Sotyktu and cancer cell therapy Abecma were below analyst expectations, while revenue from Opdivo dropped 6% due to “inventory work down and timing of customer orders” in the U.S., the company said.
Overall, the company reported $11.9 billion in revenue during the first three months of the year, up 5% from the same period in 2023 and ahead of consensus forecasts for the quarter.
Accounting for the impact of its Karuna and RayzeBio acquisitions, Bristol Myers also revised its earnings per share forecast from between $7.10 to $7.40 a share to between $0.40 and $0.70 apiece. The company continues to expect a low single digit increase in its total reported revenue for the year.
The acquisitions have also increased Bristol Myers’ debt to more than $55 billion, around $10 billion of which it plans to pay down over the next two years.
Shares fell by nearly 8% in Thursday morning trading, erasing some $7 billion in market capitalization.
Editor’s note: This story has been updated with executive commentary from an earnings conference call.
