While Eli Lilly is positioned to achieve growth in the second half of this decade, Bristol Myers Squibb is not, according to a comprehensive look at the U.S. pharma industry from Morgan Stanley.
Prospects this decade also are bright for AbbVie, Morgan Stanley says, while the analysts' expectations for Johnson & Johnson, Merck, Pfizer and Organon are tempered.
With the potential to launch five new products over the next two years, Lilly has the “most robust new product cycle,” positioning the company for growth, analyst Terence Flynn, Ph.D., wrote to clients.
Led by diabetes and obesity prospect tirzepatide, the analysts believe Lilly is set up for a 40% increase in revenue between 2022 and 2025. Morgan Stanley explained that its unbridled optimism for tirzepatide, which is up for a June approval, is based on its AlphaWise physician survey combined with “weight loss/outcomes data and payer work.”
As for AbbVie, the analysts see the drugmaker delivering on its diversification strategy after the loss of exclusivity for mega-blockbuster Humira.
“We have a more bullish view relative to guidance/consensus on Skyrizi/Rinvoq in gastro indications based on our physician checks, underlying market growth and expected penetration,” Flynn wrote.
The analysts also believe AbbVie’s pipeline candidates—especially its cancer offerings—are undervalued by Wall Street.
On the flip side, the analysts see a challenging decade ahead for BMS as generic and biosimilar competition to some of its most significant franchises will represent $30 billion in lost revenue, Morgan Stanley estimates.
The company has launched seven drugs since 2020 and expects two more to be approved this year, guiding to revenue of $25 billion for the nine launches in 2029. Morgan Stanley is considerably less optimistic, estimating sales from the products to reach between $16 billion and $18 billion. In making that estimate, the analyst team cited physician input and “competitive headwinds.”
As for the company’s CAR-T treatment Breyanzi, the analysts said they expect a challenge from bispecifics.
“We see BMS at risk of ceding its leadership position in multiple myeloma to JNJ,” Flynn wrote. “As a result we see limited potential for multiple expansion and we see a need for the company to continue to lean into later-stage M&A in order to add additional revenue and further enhance visibility on growth beyond 2025.”
The analysts also see lots of growth for Royalty Pharma, a buyer of pharmaceutical royalties. Morgan Stanley is projecting 11% compounded annual growth for Royalty as opposed to 8% for the industry.