In 2011, major pharmaceutical companies faired well in stock performance. Pfizer, Abbott and Eli Lilly all gained 15+%, but the clear best performer was Bristol-Myers Squibb, gaining 32%. So Forbes declares in its end-of-year appraisal of the financial performance of Big Pharma, as well as biotech companies.
Examining the wider time frame of these companies’ performance, only Bristol presently trades at a share price above where it stood 5 years ago.
Forbes found that biotech companies did even better in 2011, outperforming Big Pharma. Alexion and Biogen Idec are cited as examples, with stock values jumping 70% this year. Novo Nordisk is a similar strong performer long-term, although 2011 was not a good year.
Notable here is that Forbes defines “best” primarily on financial performance, which can be based as much on expectations of future performance as on the present picture of success with products on the market. For instance, Bristol’s publishing in August of clinical trial results for Eliquis, co-developed with Pfizer. The trial shows that the new blood thinner is the first proven to reduce the risk of death compared to warfarin, which has been the standard drug used for 70 years. Eliquis has not been FDA-approved, though; so Bristol’s financial boost here is based on strong expectations, not actual drug sales.
In addition, improved financial performance can result from refining or even redefining a company’s business strategy. In this regard, Bristol has pioneered a strategy of selling off non-core businesses and brands and honing their focus focus on strengthening their pharmaceutical presence. One aspect of this strategy has been acquiring biotech firms, such as what had been considered a “daring deal” in 2009 — acquisition of Medarex.
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Rob Lazzaro is BeechTree Partners’ Senior Vice President & Life Sciences Practice Leader. He can be contacted at RLazzaro@beechtreepartners.com.
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