New York, February 15, 2022 -- Moody's Investors Service ("Moody's") assigned
an A2 rating to the new senior unsecured note offering of Bristol-Myers
Squibb Company ("Bristol"). The outlook remains stable.
Uses of proceeds include a recently announced tender offer for existing
indebtedness as well as general corporate purposes.
Assignments:
..Issuer: Bristol-Myers Squibb Company
.Senior Unsecured Notes, assigned A2
RATINGS RATIONALE
Bristol's A2 rating reflects its large scale and solid positions in immuno-oncology,
hematology, cardiovascular and immunology products. Most
of the company's core products will continue strong growth, supplemented
by recent and upcoming product launches. Pending drug approvals
with high potential include deucravacitinib in autoimmune disorders and
mavacamten in hypertrophic cardiomyopathy. Due to high margins,
free cash flow will remain robust at over $10 billion per year.
Gross debt/EBITDA is moderate at about 2.5x, and Moody's
anticipates further deleveraging from ongoing debt maturities.
The rating is constrained by high revenue concentration in Revlimid,
Eliquis and Opdivo, which comprise over 60% of revenue.
Bristol's growth will moderate for several years starting in 2022 as generic
Revlimid reaches the market, albeit at capped volumes in the US.
Larger patent cliffs will considerably dampen Bristol's earnings beginning
in 2026 and likely place continued reliance on acquisitions.
Social and governance considerations are material to Bristol's rating.
Like other pharmaceutical companies, Bristol faces rising exposure
to regulatory and legislative efforts aimed at reducing drug prices.
These are fueled in part by demographic and societal trends that are pressuring
government budgets because of rising healthcare spending. Bristol's
higher-than-average revenue concentration in the US market,
as well as the high use of certain products by Medicare beneficiaries
results in above-average exposure to this risk. Environmental
exposures include physical climate risk related to production facilities
in Puerto Rico, which is prone to tropical storms. Among
governance considerations, disciplined financial policies and a
deleveraging commitment are a positive, notwithstanding the increase
in financial leverage resulting from the acquisitions of Celgene and MyoKardia.
The outlook is stable, reflecting Moody's expectation for solid
operating performance and deleveraging due primarily to ongoing debt maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade of the ratings include improved
revenue diversity, successful pipeline execution, and successful
uptake of new product launches. Quantitatively, debt/EBITDA
sustained below 1.5x could lead to an upgrade.
Factors that could lead to a downgrade include weak pipeline execution
or slow commercial uptake of new products, unexpected generic competition
for key products, or debt-funded acquisitions. Quantitatively,
debt/EBITDA sustained above 2.5x could lead to a downgrade.
Headquartered in New York, New York, Bristol-Myers
Squibb Company ("Bristol") is a leading global pharmaceutical
company with strong positions in oncology, cardiovascular disease,
and immunology. Revenues in 2021 totaled $46.4 billion.
The principal methodology used in these ratings was Pharmaceuticals published
in November 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1285013.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 credit rating action on the
support provider and in relation to each particular credit 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
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and whose ratings may change as a result of this credit rating action,
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Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
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Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
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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: 1 212 553 0376
Client Service: 1 212 553 1653
Ola Hannoun-Costa
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
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