Businessmodel of Bristol-Myers Squibb

Customer Segments

Bristol Myers Squibb sells its various pharmaceutical products to customers operating within the healthcare sector. The Company markets its products directly to healthcare professionals and providers – including doctors, nurse practitioners, physician assistants, pharmacists, technologists, pharmacy benefit managers and managed care organisations – but principally sells its products to wholesalers, retail pharmacies, hospitals, and government entities. In 2015 the Company’s three largest customers were distributors McKesson, AmerisourceBergen and Cardinal Health.

Bristol Myers Squibb serves customers worldwide. It largest market is its native US, which accounted for around 49% of the Company’s business in 2015. The Company also does considerable business across Europe, Japan, and China, which accounted for 21%, 10% and 4% of the Company’s 2015 business.

Value Propositions

Bristol Myers Squibb provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company one of the most recognisable names in its industry, having an established track record of providing quality and reliable products;
• Its proprietary technologies and unique products, with the Company utilising protected intellectual properties in its products to provide unique and innovative products;
• Its international marketing reach, accessing customers worldwide, including across the Americas, Europe and Asia Pacific;
• The technical expertise of its staff, with the Company employing specialist technical, personnel, physicians and scientists with graduate or post-graduate degrees; and
• Its commitment to innovations, with the Company committing substantial resources to the development of innovative products. ### Channels

Bristol Myers Squibb operates a website at www.bms.com, through which it disseminates information pertaining to its operations, products and facilities. The Company, however, does not operate an online sales channel.

Bristol Myers Squibb operates several marketing and sales organisations, with each product marketing organisation being supported by a direct sales force, which may be responsible for selling one or more products. The Company also operates specialist marketing teams that focus on certain classes of customers, such as managed care entities, as well as on certain types of marketing tools, such as digital or consumer communications.

In a small number of jurisdictions outside the US, Bristol Myers Squibb has established a full scale distributor model, collaborating with a network of distributors and sales agents to provide local distribution and logistics, regulatory assistance, and sales and advertising for certain products.

Customer Relationships

Bristol Myers Squibb does not offer any of its products to customers on a self-service basis. Instead, customers must deal directly with one of the Company’s direct sales organisations, in order to accurately outline the details of a sales agreement, with each customer receiving a personalised service.

Bristol Myers Squibb seeks to establish long-term relationships with its customers. The Company’s US business has Inventory Management Agreements with all of its direct wholesaler and distributor customers, enabling it to monitor US wholesaler inventory levels. The Company’s existing Inventory Management Agreements are due to expire at the end of 2017.

Customers are able to stay up to date with Bristol Myers Squibb’s operations through the Company’s news portal and press releases. They are also able to contact the Company over the phone or through an online contact form, as well as through the Company’s social media accounts with Facebook, Twitter, LinkedIn and YouTube.

Key Activities

Bristol Myers Squibb is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products, operating through a single business segment.

The Company’s products portfolio includes chemically synthesised drugs- largely in pill and tablet form – and products produced from biological processes named biologics, which are administered to patients through injections or by infusion.

This includes products such as Azactam, Eliquis, Droxia, Megace, Opdivo, and Zerit. The Company focuses its research and development activities on products for a range of therapeutic classes, including virology, oncology, immunoscience; cardiovascular, and neuroscience.

Key Partners

Bristol Myers Squibb collaborates with a range of partner companies throughout the development, production and sale of its products. These partners include:

• Licensing and Co-Development Partners, comprising intellectual property owners and pharmaceutical companies, with which the Company jointly produces or licenses the rights to produce pharmaceutical products;
• Joint-Marketing and Promotion Partners, comprising pharmaceutical companies with which the Company jointly markets and promotes certain products, often on a regional basis;
• Channel Partners, comprising distributors and sales agents that extend the Company’s sales reach in its less well-represented countries; and
• Research and Development Partners, comprising research organisations and pharmaceutical companies, with which the Company collaborates on the development of new products. Bristol Myers Squibb has recently launched a licensing partnerships with Novo Nordisk and Innate Pharma; research partnerships with UniQure, Lexicon Pharmaceuticals, and Tsinghua University; and clinical collaborations with Eli Lilly, Novartis, and Seattle Genetics.

Key Resources

Bristol Myers Squibb’s key resources are its technologies and intellectual properties, its research and development facilities, its production facilities, its sales and marketing channels, its partnerships, and its personnel.

Bristol Myers Squibb owns or licenses a number of patents in the US and abroad, and has developed a number of brand names and trademarks for its products. The Company considers the overall protection of its patents, trademarks, and licenses to be of material importance to the Company’s ongoing operations.

Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in the name of Bristol Myers Squibb, including applications entitled ‘Pyrimidinone carboxamide inhibitors of endothelial lipase’, Compounds for the treatment of hepatitis C’ and ‘Fibronectin binding domains with reduced immunogenicity’.

Cost Structure

Bristol Myers Squibb incurs costs in relation to the development of its products, the operation of its production facilities – including the management of its supply chain, the operation of its sales and marketing channels, the management of its partnerships, and the retention of its personnel.

Bristol Myers Squibb invests heavily in research and development, operating facilities the US, Belgium, the UK, India, and Japan. In 2015 the Company’s research and development spending amounted to $5.9 billion. The Company accrued Marketing, selling and administrative costs – including the payment of salaries and benefits to its workforce of 25,000 employees – in the amount of $4.84 billion for the year.

Revenue Streams

Bristol Myers Squibb generates revenue through the production and sale of various pharmaceutical products. This principally includes:

• Virology Products, such as Baraclude, Reyatoz, and Sustiva;
• Oncology Products, such as Empliciti, Erbitux, and Opdivo;
• Neuroscience Products, such as Abilify;
• Immunoscience Products, such as Orencia; and
• Cardiovascular Products, such as Eliquis. In 2015, Bristol Myers Squibb generated total revenue for the year of $16.56 billion, up on the $15.88 billion recorded by the Company in 2014. The Company attributed this 4% increase to a number of its recently launched products, notably its Hepatitis C Franchise and Opdivo, as well as continued sales growth in Eliquis.

Bristol Myers Squibb’s virology products are its largest revenue generators, accounting for close to 33% of the Company’s total revenue for 2015. This was followed by oncology products which accounted for approximately 25% of the Company’s revenue for the year.