BMY's Growth Portfolio Gains 17% in 2025, Offset Legacy Decline But Execution Risks Persist

What happened

A recent article highlights that Bristol Myers Squibb's growth drugs rose 17% in the first nine months of 2025, helping offset a 16% decline in legacy drug sales. This data aligns with the DeepValue report, which shows the Growth Portfolio now constitutes 47% of revenue and is growing at mid-teens rates, while legacy products continue to erode. However, the company faces one of the steepest patent cliffs in big pharma, with approximately 64% of 2025 revenue at risk of loss of exclusivity by 2030, compounded by high leverage at 12.9x net debt/EBITDA. Strong free cash flow has enabled $6.4 billion in net debt reduction year-to-date, but ongoing M&A integration and restructuring add to execution challenges. Investors must critically assess whether this growth momentum can sustain top-line expansion amidst looming pricing pressures and operational headwinds.

Implication

The 17% growth in newer drugs is encouraging, suggesting BMY's portfolio renewal strategy is progressing as planned. However, persistent legacy declines underscore the urgency for the Growth Portfolio to accelerate further to achieve net revenue growth. High leverage and debt reduction targets depend on continued robust free cash flow, which could falter if growth underperforms or costs rise unexpectedly. Execution on pipeline launches and cost savings is critical, as any setbacks could worsen the impact of the patent cliff and Inflation Reduction Act negotiations. Given the 44% discount to DCF value, patient investors might find opportunity, but BMY remains a high-risk, show-me story until clear evidence of sustainable execution emerges.

Thesis delta

The news reinforces the DeepValue report's thesis that BMY is in a transition phase, with growth drugs offsetting legacy declines, confirming the ongoing mix shift. It does not materially shift the thesis, as the core risks—steep LOE exposure, high leverage, and execution dependencies—remain unchanged and central to the investment case. Investors should continue to monitor quarterly performance for signs that growth can accelerate sufficiently to meet the challenging timeline ahead.