Approximately $7.8 billion of rated debt affected
New York, April 28, 2015 -- Moody's Investors Service affirmed the ratings of Bristol-Myers
Squibb including the A2 senior unsecured long-term rating and the
Prime-1 rating on short-term obligations. At the
same time, Moody's revised the rating outlook to stable from
negative.
"The outlook change to stable from negative reflects very strong
sales potential for Opdivo, a new oncology product that recently
received US approval in both melanoma and lung cancer," stated
Michael Levesque, Moody's Senior Vice President.
Despite an evolving competitive landscape, the market size for anti-PD1
and anti-PDL1 drugs is large, and Moody's anticipates
that Bristol will be a market leader based on expanding indications and
global approvals.
The affirmation of the ratings also reflects Bristol's conservative
financial policies, reflected in Moody's expectation that
the company will sustain debt/EBITDA below 1.75 times while maintaining
high levels of cash on hand.
Ratings affirmed:
Senior Unsecured Bank Credit Facility at A2
Senior Unsecured Conv./Exch. Bond/Debenture at A2
Senior Unsecured Commercial Paper at Prime-1
Senior Unsecured Regular Bond/Debenture at A2
Senior Unsecured Revenue Bonds at A2/Prime-1
Multiple Seniority Shelves at (P)A3, (P)A2, (P)Baa1
Outlook Actions:
Outlook Changed to Stable from Negative
RATINGS RATIONALE
Bristol's A2 rating reflects the company's medium-sized scale in
the global pharmaceutical market, where it ranks smaller and less
diverse than a number of major pharmaceutical firms, but still considerably
larger and more diverse than biotech and specialty pharmaceutical companies.
Bristol's pipeline momentum is strong and products launched in the last
few years -- like Opdivo, Yervoy, Orencia and
Eliquis -- will continue to grow. Bristol's
cancer drug Opdivo has good potential to be the leading anti-PD1
cancer drug on the market and was the first to receive approval in squamous-cell
lung cancer. A trial testing Opdivo in non-squamous lung
cancer was recently stopped early due to high efficacy, likely to
lead to approval in this indication. Upside in Opdivo, however,
is partially offset by exposure to patent expirations in the next two-to-three
years, affecting products like Sustiva, Reyataz (in the US)
and Baraclude (outside the US).
Bristol's debt/EBITDA will increase during 2015 and likely peak
at about 2.3 times due to the cessation of Abilify revenues in
April 2015. As Opdivo grows, Moody's anticipates that
debt/EBITDA will decline to below 1.75 times. The A2 rating
reflects single-digit free cash flow/debt, owing to Bristol's
large shareholder dividend. Although cash levels are very high,
Bristol consumes cash in the US (primarily because of its high shareholder
dividend) and may eventually require an increase in debt, pressuring
its credit metrics.
The rating outlook is stable, reflecting Moody's expectation
that the Opdivo launch will be highly successful over time, helping
to replenish revenue lost from upcoming patent expirations. The
ratings could be upgraded if Bristol sustains debt/EBITDA below 1.25
times, increases business diversity, and faces lower exposure
to patent expirations through strong growth of newer products.
The ratings could be downgraded if Bristol sustains debt/EBITDA above
1.75 times, increases debt to fund the dividend, share
repurchases or acquisitions, or faces weak pipeline execution,
particularly related to Opdivo in expanded indications.
The principal methodology used in these ratings was Global Pharmaceutical
Industry published in December 2012. Please see theCredit Policy
page on www.moodys.com for a copy of this methodology.
Headquartered in New York, New York, Bristol-Myers
Squibb Company ("Bristol") is a leading global pharmaceutical and healthcare
company with strong positions in infectious diseases, oncology,
central nervous system, and cardiovascular. Revenues for
the 12 months ended March 31, 2015 totaled approximately $16.1
billion.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Michael Levesque, CFA
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms Bristol-Myers Squibb at A2; outlook now stable