Just nine months after announcing a hefty plan to cut costs, Bristol Myers Squibb has gone one better, revealing a new goal to save even more money.
The new plan, which has been dubbed a “strategic productivity initiative,” will slash $2 billion in costs by the end of 2027. It comes on top of a $1.5 billion initiative that the company unveiled in April of last year, which targets more than 2,000 layoffs.
The new round of cost cuts will include more layoffs, but the company did not reveal how many employees will be affected.
In an investor presentation (PDF), BMS said that savings will be “driven by changes in organizational design and efforts to enhance operational efficiency.”
“These savings will be removed from our cost structure to contribute to a leaner, more efficient company while investing behind growth brands and promising areas of science,” BMS added.
On a conference call Thursday, CEO Chris Boerner said that the company expects $1 billion of the savings to be accomplished this year and the remainder by the end of 2027.
“Throughout 2024, operational excellence and financial discipline were top priorities for us,” Boerner said. “[As] part of this effort, we reallocated significant spend towards high potential growth opportunities, achieving most of our targeted $1.5 billion in savings. We expect to capture the remainder this year.”
The additional cuts come as the New Jersey company faces the loss of patent protection for two of its biggest moneymakers—cancer treatment Opdivo and blood thinner Eliquis, which also is subject to a price adjustment in 2026 as it is one of the first 10 drugs affected by government negotiations mandated by the Inflation Reduction Act.
Additionally, BMS is already feeling the pinch from the loss of exclusivity (LOE) of blood cancer medicine Revlimid.
The cuts also come after BMS made a splurge of acquisitions at the end of 2023. In a span of three months, the company paid a combined $23 billion for Karuna Therapeutics, Mirati Therapeutics and RayzeBio.
The company is counting heavily on Cobenfy, which was approved in September and was the crown jewel of the $14 billion buyout of Karuna.
BMS reported sales of $10 million for Cobenfy in the fourth quarter as the launch is off to a “great start,” according to Boerner, who added that the company has initiated seven phase 3 studies across three indications for the game-changing treatment.
“The significant ramp-up in spending on Cobenfy illustrates our focus in continuing to invest behind key growth drivers while maintaining financial discipline,” Boerner said.
BMS reported 2024 revenue of $48.3 billion, which was a 7% increase year over year. For the fourth quarter, sales were up 8% to $12.3 billion. The performance topped expectations, with earnings-per-share reaching $1.67 versus an expected $1.46.
The company estimates, however, that revenue will take a significant hit this year, falling to $45.5 billion, which was nearly $1 billion short of consensus expectations.
Boerner noted that “we’re seeing the increased step-down on Revlimid.”
“This was a strong quarter, tarnished by lower-than-expected guidance. We believe that Bristol being cautious this early in the year also played a role,” John Boylan, healthcare analyst with Edward Jones, wrote in a note to clients. “Longer-term, we believe that Bristol has done a solid job in improving its pipeline, with recent acquisitions potentially adding to growth. We also believe Bristol has a strong management team. However, fully overcoming current and upcoming generic competition may take time.”
BMS is not the only U.S. pharma giant making massive cuts. Last year, Pfizer revealed a similar plan to reduce costs by an additional $1.5 billion through 2027. That initiative came after the company began executing a plan to reduce costs by $4 billion.
Editor's Note: The story was updated with additional comments from a conference call.