Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of results of operations and financial condition is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

EXECUTIVE SUMMARY

Our principal strategy is to combine the resources, scale and capability of a large pharmaceutical company with the speed, agility and focus on innovation typically found in the biotech industry. Our priorities are to continue to renew and diversify our portfolio through launching new medicines, advancing our early, mid and late-stage pipeline, and executing disciplined business development. Our focus is on discovering, developing and delivering transformational medicines for patients facing serious diseases in the following core therapeutic areas: (i) oncology with a priority in certain tumor types; (ii) hematology with opportunities to broaden our franchise and sustain a leadership position in multiple myeloma; (iii) immunology with priorities in relapsing multiple sclerosis, psoriasis, psoriatic arthritis, lupus, RA and inflammatory bowel disease; (iv) cardiovascular disease (v) fibrotic disease with priorities in lung and liver, and (vi) neuroscience with a focus on neurodegenerative disease. We remain committed to maintaining a strong investment grade credit rating and returning capital to shareholders. For further information on our strategy, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Strategy" in our 2022 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

In the first quarter of 2023, we received approvals in the EU and Japan for three products, which further expanded our geographical reach in immunology and hematology, including (i) approval of Opdivo in combination with chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC (Japan); (ii) EC approval for Sotyktu for moderate-to-severe plaque psoriasis and (iii) EC approval for an additional indication for anemia associated with non-transfusion-dependent beta thalassemia for Reblozyl.

Our revenues decreased by 3% during the first quarter of 2023 due to Revlimid generic erosion and 2% foreign exchange impact, partially offset by In-Line Products (primarily Opdivo and Eliquis) and New Product Portfolio (primarily Opdualag and Abecma). The $0.48 increase in GAAP EPS primarily resulted from specified items, including lower equity investment losses in the first quarter of 2023, higher litigation and other settlements income in the first quarter of 2023 and debt redemption charge in the first quarter of 2022. After adjusting for specified items, non-GAAP EPS increased $0.09 as a result of lower Acquired IPRD charges, lower weighted-average common shares outstanding, higher royalties and interest income partially offset by lower revenues.


	Three Months Ended March 31,
Dollars in millions, except per share data	2023		2022
Total Revenues	$	11,337	$	11,648

Diluted earnings per share
GAAP	$	1.07	$	0.59
Non-GAAP	2.05		1.96

Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items that represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For further information and reconciliations relating to our non-GAAP financial measures refer to "—Non-GAAP Financial Measures."

Economic and Market Factors

Governmental Actions

Our products continue to be subject to increasing pressures across the portfolio from pharmaceutical market access and pricing controls and discounting, changes to tax and importation laws and other restrictions in the U.S., the EU and other regions around the world that result in lower prices, lower reimbursement rates and smaller populations for whom payers will reimburse, which can negatively impact our results of operations (including intangible asset impairment charges), operating cash flow, liquidity and financial flexibility. For example, some of the provisions of the IRA signed into law in August 2022, were as follows: (i) the government is to negotiate prices for certain high-cost Medicare Part D and Part B drugs, (ii) manufacturers are to pay an inflation-based rebate for Medicare Part B and Part D drugs, and (iii) Medicare Part D redesign. In addition, there were changes made to U.S. tax laws, including (i) a 15% minimum tax that generally applies to U.S. corporations, and a (ii) a non-deductible 1% excise tax provision on net stock repurchases, to be applied to repurchases beginning in 2023. Implementation of this legislation is expected to be carried out through upcoming actions by regulatory authorities, the outcome of which is uncertain. We continue to evaluate the impact of the IRA legislation on our results of operations and it is possible that these changes may result in a material impact on our business and results of operations. Furthermore, countries are expected to make changes to their tax laws and updates to international tax treaties to implement the agreement by the Organization for Economic Co-operation and Development to establish a global minimum tax. See risk factors on these items included under "Part I—Item 1A. Risk Factors—Product, Industry and Operational Risks—Increased pricing pressure and other restrictions in the U.S. and abroad continue to negatively affect our revenues and profit margins" and "—Changes to tax regulations could negatively impact our earnings" in our 2022 Form 10-K.

Significant Product and Pipeline Approvals

The following is a summary of the significant approvals received in 2023 as of April 27, 2023:


Product			Date			Approval


Opdivo			March 2023			Japan's Ministry of Health, Labour and Welfare approval of Opdivo plus chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC.


Sotyktu			March 2023			EC approval of Sotyktu for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy.


Reblozyl			March 2023			EC approval of Reblozyl for the treatment in adult patients of anemia associated with non-transfusion-dependent beta thalassemia.

Refer to "—Product and Pipeline Developments" for the developments in our marketed products and late-stage pipeline since the start of the first quarter of 2023.

Divestitures, Licensing and Other Arrangements

Refer to "Item 1. Financial Statements—Note 3. Alliances" and "—Note 4. Divestitures, Licensing and Other Arrangements" for information on significant divestitures, licensing and other arrangements.

RESULTS OF OPERATIONS

Regional Revenues

The composition of the changes in revenues was as follows:


	Three Months Ended March 31,
Dollars in millions	2023		2022		% Change		Foreign Exchange(b)
United States	$	8,033	$	7,694	4	%	—
International	3,149		3,727		(16)	%	(5)	%

Other(a)	155		227		(32)	%	—
Total	$	11,337	$	11,648	(3)	%	(2)	%

(a) Other revenues include royalties and alliance-related revenues for products not sold by our regional commercial organizations.

(b) Foreign exchange impacts were derived by applying the prior period average currency rates to the current period sales.

United States

U.S. revenues increased 4% during the first quarter of 2023 primarily due to Eliquis, Opdivo and our New Product Portfolio partially offset by Revlimid generic erosion*.* Average U.S. net selling prices increased 1% compared to the same period a year ago.

International

International revenues decreased 16% during the first quarter of 2023 primarily due to Revlimid and Eliquis generic erosion, foreign exchange and lower average net selling prices partially offset by Opdivo and New Product Portfolio demand.

No single country outside the U.S. contributed more than 10% of total revenues during the first quarter of 2023 and 2022. Our business is typically not seasonal.

GTN Adjustments

The reconciliation of gross product sales to net product sales by each significant category of GTN adjustments was as follows:


	Three Months Ended March 31,
Dollars in millions	2023			2022			% Change
Gross product sales	$	17,288		$	16,650		4	%
GTN adjustments
Charge-backs and cash discounts	(2,091)			(1,763)			19	%
Medicaid and Medicare rebates	(2,482)			(2,084)			19	%
Other rebates, returns, discounts and adjustments	(1,667)			(1,495)			12	%
Total GTN adjustments	(6,240)			(5,342)			17	%
Net product sales	$	11,048		$	11,308		(2)	%

GTN adjustments percentage	36		%	32		%	4	%
U.S.	41		%	37		%	4	%
Non-U.S.	18		%	16		%	2	%

Reductions to provisions for product sales made in prior periods resulting from changes in estimates were $87 million and $74 million during the three months ended March 31, 2023 and 2022, respectively. GTN adjustments are primarily a function of product sales volume, regional and payer channel mix, contractual or legislative discounts and rebates. U.S. GTN adjustments percentage increased primarily due to product mix and higher government channel rebates.

Product Revenues


	Three Months Ended March 31,
Dollars in millions	2023		2022		% Change
In-Line Products
Eliquis	$	3,423	$	3,211	7	%
U.S.	2,554		2,147		19	%
Non-U.S.	869		1,064		(18)	%

Opdivo	2,202		1,923		15	%
U.S.	1,290		1,099		17	%
Non-U.S.	912		824		11	%

Pomalyst/Imnovid	832		826		1	%
U.S.	545		557		(2)	%
Non-U.S.	287		269		7	%

Orencia	764		792		(4)	%
U.S.	562		592		(5)	%
Non-U.S.	202		200		1	%

Sprycel	429		483		(11)	%
U.S.	295		305		(3)	%
Non-U.S.	134		178		(25)	%

Yervoy	508		515		(1)	%
U.S.	314		311		1	%
Non-U.S.	194		204		(5)	%

Mature and other products	467		537		(13)	%
U.S.	182		180		1	%
Non-U.S.	285		357		(20)	%

Total In-Line Products	8,625		8,287		4	%
U.S.	5,742		5,191		11	%
Non-U.S.	2,883		3,096		(7)	%


	Three Months Ended March 31,
Dollars in millions	2023	2022	% Change
New Product Portfolio
Reblozyl	206	156	32	%
U.S.	158	134	18	%
Non-U.S.	48	22	*

Abecma	147	67	*
U.S.	118	56	*
Non-U.S.	29	11	*

Opdualag	117	6	*
U.S.	116	6	*
Non-U.S.	1	—	N/A

Zeposia	78	36	*
U.S.	52	21	*
Non-U.S.	26	15	73	%

Breyanzi	71	44	61	%
U.S.	58	41	41	%
Non-U.S.	13	3	*

Onureg	34	23	48	%
U.S.	25	19	32	%
Non-U.S.	9	4	*

Inrebic	25	18	39	%
U.S.	17	15	13	%
Non-U.S.	8	3	*

Camzyos	29	—	N/A
U.S.	29	—	N/A
Non-U.S.	—	—	N/A

Sotyktu	16	—	N/A
U.S.	15	—	N/A
Non-U.S.	1	—	N/A

Total New Product Portfolio	723	350	*
U.S.	588	292	*
Non-U.S.	135	58	*

Total In-Line Products and New Product Portfolio	9,348	8,637	8	%
U.S.	6,330	5,483	15	%
Non-U.S.	3,018	3,154	(4)	%


	Three Months Ended March 31,
Dollars in millions	2023		2022		% Change









































Recent LOE Products(a)
Revlimid	1,750		2,797		(37)	%
U.S.	1,541		2,038		(24)	%
Non-U.S.	209		759		(72)	%

Abraxane	239		214		12	%
U.S.	162		173		(6)	%
Non-U.S.	77		41		88	%

Total Recent LOE Products	1,989		3,011		(34)	%
U.S.	1,703		2,211		(23)	%
Non-U.S.	286		800		(64)	%

Total Revenues	$	11,337	$	11,648	(3)	%
U.S.	8,033		7,694		4	%
Non-U.S.	3,304		3,954		(16)	%

Change in excess of 100%.

(a) Recent LOE Products includes products with significant decline in revenue from a prior reporting period as a result of a loss of exclusivity.

In-Line Products

Eliquis (apixaban) — an oral Factor Xa inhibitor, indicated for the reduction in risk of stroke/systemic embolism in NVAF and for the treatment of DVT/PE and reduction in risk of recurrence following initial therapy.

U.S. revenues increased 19% during the first quarter of 2023 primarily due to higher demand and to a lesser extent higher average net selling prices.
International revenues decreased 18% during the first quarter of 2023 primarily due to generic erosion in Canada and the UK, foreign exchange impacts of 5% and lower average net selling prices. Excluding foreign exchange impacts, revenues decreased by 13%.
Following the May 2021 expiration of regulatory exclusivity for Eliquis in Europe, and court decisions in (i) the United Kingdom finding the UK apixaban composition of matter patent and related SPC invalid and (ii) the Netherlands denying a BMS request for a preliminary injunction that would have prevented an at-risk generic launch, generic manufacturers have begun marketing generic versions of Eliquis in the UK and the Netherlands, and may seek to market generic versions of Eliquis in additional countries in Europe, prior to the expiration of our patents, which has led to additional infringement and invalidity actions involving our Eliquis patents being filed in various countries in Europe. We believe in the innovative science behind Eliquis and the strength of our intellectual property, which we will defend against infringement. Refer to "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies—Intellectual Property" for further information.

Opdivo (nivolumab) — a fully human monoclonal antibody that binds to the PD-1 on T and NKT cells that has been approved for several anti-cancer indications including bladder, blood, CRC, head and neck, RCC, HCC, lung, melanoma, MPM, stomach and esophageal cancer. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and various gastric and esophageal cancers. There are several ongoing potentially registrational studies for Opdivo across other tumor types and disease areas, in monotherapy and in combination with Yervoy and various anti-cancer agents.

U.S. revenues increased 17% during the first quarter of 2023 due to higher demand across multiple indications and to a lesser extent higher average net selling prices partially offset by declining second-line eligibility across tumor indications. The higher demand was related to the following indications: the Opdivo+Yervoy combinations for NSCLC, various gastric, esophageal and bladder cancers.
International revenues increased 11% during the first quarter of 2023 due to higher demand as a result of additional indication launches and core indications partially offset by foreign exchange impacts of 7%. Excluding foreign exchange impacts, revenues increased 18%.

Pomalyst/Imnovid (pomalidomide) — a proprietary, distinct, small molecule that is administered orally and modulates the immune system and other biologically important targets. Pomalyst/Imnovid is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy.

*•*U.S. revenues decreased 2% during the first quarter of 2023 due to lower demand partially offset by higher average net selling prices.

International revenues increased 7% during the first quarter of 2023 primarily due to higher demand partially offset by lower average net selling prices and foreign exchange impacts of 5%. Excluding foreign exchange impacts, revenues increased by 12%.

Orencia (abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and PsA and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular JIA.

U.S. revenues decreased 5% during the first quarter of 2023 primarily due to lower average net selling prices.
International revenues increased 1% during the first quarter of 2023 due to higher demand partially offset by foreign exchange impacts of 9%. Excluding foreign exchange impacts, revenues increased by 10%.
BMS is not aware of any Orencia biosimilars on the market in the U.S., EU and Japan. Formulation and additional patents expire in 2026 and beyond.

Sprycel (dasatinib) — an oral inhibitor of multiple tyrosine kinase indicated for the first-line treatment of patients with Philadelphia chromosome-positive CML in chronic phase and the treatment of adults with chronic, accelerated, or myeloid or lymphoid blast phase CML with resistance or intolerance to prior therapy, including Gleevec* (imatinib mesylate) and the treatment of children and adolescents aged 1 year to 18 years with chronic phase Philadelphia chromosome-positive CML.

U.S. revenues decreased 3% during the first quarter of 2023 due to lower average net selling prices.
International revenues decreased 25% during the first quarter of 2023 due to lower demand as a result of generic erosion and foreign exchange impacts of 6%. Excluding foreign exchange impacts, revenues decreased by 19%.
In the U.S., BMS entered into settlement agreements with certain third parties to sell generic dasatinib products beginning in September 2024, or earlier in certain circumstances. In the EU, generic dasatinib products have entered the market. In Japan, the composition of matter patent has been extended to 2024 for the treatment of non-imatinib-resistant CML, but generics have been approved for other indications.

Yervoy (ipilimumab) — a monoclonal antibody for the treatment of patients with unresectable or metastatic melanoma. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and esophageal cancer.

U.S. revenues increased 1% during the first quarter of 2023.
International revenues decreased 5% during the first quarter of 2023 primarily due to foreign exchange impacts of 8% partially offset by higher demand as a result of additional indication launches and core indications. Excluding foreign exchange impacts, revenues increased by 3%.

Mature and other products — includes all other products, including those which have lost exclusivity in major markets, OTC products, royalty revenue and mature products.

International revenues decreased 20% during the first quarter of 2023 primarily due to continued generic erosion and foreign exchange impacts of 4%. Excluding foreign exchange impacts, revenues decreased by 16%.

New Product Portfolio

Reblozyl (luspatercept-aamt) — an erythroid maturation agent indicated for the treatment of anemia in adult patients with transfusion dependent and non-transfusion dependent beta thalassemia who require regular red blood cell transfusions and for the treatment of anemia failing an ESA in adult patients with very low- to intermediate-risk MDS who have ring sideroblasts and require RBC transfusions.

U.S. revenues increased 18% during the first quarter of 2023 primarily due to higher demand.

Abecma (idecabtagene vicleucel) — is a B-cell maturation antigen-directed genetically modified autologous CAR–T cell therapy indicated for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. Abecma was launched in May 2021.

U.S. revenues increased 111% during the first quarter of 2023 primarily due to higher demand enabled by additional manufacturing capacity.

Opdualag (nivolumab and relatlimab-rmbw) — a combination of nivolumab, a PD-1 blocking antibody, and relatlimab, a LAG-3 blocking antibody, indicated for the treatment of adult and pediatric patients 12 years of age or older with unresectable or metastatic melanoma. Opdualag was launched in March 2022.

Zeposia (ozanimod) — an oral immunomodulatory drug used to treat relapsing forms of multiple sclerosis, to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults and to treat moderately to severely active UC in adults. Zeposia was launched in June 2020.

Breyanzi (lisocabtagene maraleucel) — is a CD19-directed genetically modified autologous CAR-T cell therapy indicated for the treatment of adult patients with certain types of relapsed or refractory large B-cell lymphoma after one or more lines of systemic therapy. Breyanzi was launched in April 2021.

Onureg (azacitidine) — an oral hypomethylating agent that incorporates into DNA and RNA, indicated for continued treatment of adult patients with AML who achieved first complete remission or complete remission with incomplete blood count recovery following intensive induction chemotherapy and are not able to complete intensive curative therapy. Onureg was launched in September 2020.

Inrebic (fedratinib) — an oral kinase inhibitor indicated for the treatment of adult patients with intermediate-2 or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis. Inrebic was launched in August 2019.

Camzyos (mavacamten) — a cardiac myosin inhibitor indicated for the treatment of adults with symptomatic obstructive HCM to improve functional capacity and symptoms. Camzyos was launched in April 2022.

Sotyktu (deucravacitinib) — an oral, selective, allosteric tyrosine kinase 2 inhibitor indicated for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy. Sotyktu was launched in September 2022.

Recent LOE Products

Revlimid (lenalidomide) — an oral immunomodulatory drug that in combination with dexamethasone is indicated for the treatment of patients with multiple myeloma. Revlimid as a single agent is also indicated as a maintenance therapy in patients with multiple myeloma following autologous hematopoietic stem cell transplant.

U.S. revenues decreased 24% during the first quarter of 2023 primarily due to generic erosion and to a lesser extent lower average net selling prices.
International revenues decreased 72% during the first quarter of 2023 primarily due to generic erosion across several European countries and to a lesser extent lower average net selling prices and foreign exchange impacts of 1%. Excluding foreign exchange impacts, revenues decreased by 71%.
In the U.S., certain third parties have been granted volume-limited licenses to sell generic lenalidomide beginning in March 2022 or thereafter. Pursuant to these licenses, several generics have entered or are expected to enter the U.S. market with volume-limited quantities of generic lenalidomide. In the EU, generic lenalidomide products have entered the market. Global revenues for Revlimid are expected to decline to approximately $6.5 billion in 2023.

Abraxane (paclitaxel albumin-bound particles for injectable suspension) — a solvent-free protein-bound chemotherapy product that combines paclitaxel with albumin using our proprietary Nab® technology platform, and is used to treat breast cancer, NSCLC and pancreatic cancer, among others.

U.S. revenues decreased 6% during the first quarter of 2023 due to the impact from authorized generic sales in 2023 and lower demand partially offset by manufacturing delays in the first quarter of 2022.

Estimated End-User Demand

Pursuant to the SEC Consent Order described under "— SEC Consent Order" in our 2022 Form 10-K, we monitor inventory levels on hand in the U.S. wholesaler distribution channel and outside of the U.S. in the direct customer distribution channel. We are obligated to disclose products with levels of inventory in excess of one month on hand or expected demand, subject to a de minimis exception. There were no products in the U.S. wholesaler distribution channel with estimated levels of inventory in excess of one month as of March 31, 2023. Estimated levels of inventory outside of the U.S. in the direct distribution channel in excess of one month on hand were not material to our results of operations as of December 31, 2022.

In the U.S., we generally determine our months on hand estimates using inventory levels of product on hand and the amount of out-movement provided by our three largest wholesalers, which accounted for approximately 82% of total gross sales of U.S. products during the three months ended March 31, 2023. Factors that may influence our estimates include generic competition, seasonality of products, wholesaler purchases in light of increases in wholesaler list prices, new product launches, new warehouse openings by wholesalers and new customer stockings by wholesalers. In addition, these estimates are calculated using third-party data, which may be impacted by their recordkeeping processes.

Revlimid and Pomalyst are distributed in the U.S. primarily through contracted pharmacies under the Lenalidomide REMS (Revlimid) and Pomalyst REMS programs, respectively. These are proprietary risk-management distribution programs tailored specifically to provide for the safe and appropriate distribution and use of Revlimid and Pomalyst. Internationally, Revlimid and Imnovid are distributed under mandatory risk-management distribution programs tailored to meet local authorities' specifications to provide for the products' safe and appropriate distribution and use. These programs may vary by country and, depending upon the country and the design of the risk-management program, the product may be sold through hospitals or retail pharmacies.

Camzyos is only available through a restricted program called the Camzyos REMS Program. Product distribution is limited to REMS certified pharmacies, and enrolled pharmacies must only dispense to patients who are authorized to receive Camzyos.

Our non-U.S. businesses have significantly more direct customers. Information on available direct customer product level inventory and corresponding out-movement information and the reliability of third-party demand information varies widely. We limit our direct customer sales channel inventory reporting to where we can influence demand. When this information does not exist or is otherwise not available, we have developed a variety of methodologies to estimate such data, including using historical sales made to direct customers and third-party market research data related to prescription trends and end-user demand. Given the difficulties inherent in estimating third-party demand information, we evaluate our methodologies to estimate direct customer product level inventory and to calculate months on hand on an ongoing basis and make changes as necessary. Factors that may affect our estimates include generic competition, seasonality of products, price increases, new product launches, new warehouse openings by direct customers, new customer stockings by direct customers and expected direct customer purchases for governmental bidding situations. As such, all of the information required to estimate months on hand in the direct customer distribution channel for non-U.S. business during the three months ended March 31, 2023 is not available prior to the filing of this Quarterly Report on Form 10-Q. We will disclose any product with levels of inventory in excess of one month on hand or expected demand for the current quarter, subject to a de minimis exception, in our next quarterly report on Form 10-Q.

Expenses


	Three Months Ended March 31,
Dollars in millions	2023		2022		% Change
Cost of products sold(a)	$	2,566	$	2,471	4	%
Marketing, selling and administrative	1,762		1,831		(4)	%
Research and development	2,321		2,260		3	%
Acquired IPRD	75		333		(77)	%
Amortization of acquired intangible assets	2,256		2,417		(7)	%
Other (income)/expense, net	(413)		649		*
Total Expenses	$	8,567	$	9,961	(14)	%

In excess of +/- 100%.

(a) Excludes amortization of acquired intangible assets.

Cost of Products Sold

Cost of products sold increased by $95 million during the first quarter of 2023 primarily due to higher profit sharing and royalties ($182 million) driven by Eliquis revenue growth and product mix partially offset by the elimination of the Puerto Rico excise tax and foreign exchange, including related hedging settlements.

Marketing, Selling and Administrative

Marketing, selling and administrative expense decreased $69 million during the first quarter of 2023 primarily due to the timing of charitable giving ($150 million) and foreign currency impacts partially offset by higher costs to support new product launches.

Research and Development

Research and development expense increased by $61 million during the first quarter of 2023 primarily due to the purchase of a priority review voucher ($95 million) expected to be used with an on-going development program and higher costs to support the overall portfolio partially offset by an inventory purchase price adjustment in 2022 ($87 million).

Acquired IPRD

Acquired IPRD charges resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights were as follows:


	Three Months Ended March 31,
Dollars in millions	2023		2022
Dragonfly milestone	$	—	$	175
Immatics upfront license fee	—		150
Evotec designation fee	50		—
Other	25		8
Acquired IPRD charges	$	75	$	333

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets decreased by $161 million during the first quarter of 2023 primarily due to Abraxane marketed product right being fully amortized in the fourth quarter of 2022.

Other (Income)/Expense, Net

Other (income)/expense, net changed by $1.1 billion during the first quarter of 2023 primarily due to equity investments, litigation and other settlements and other items discussed below.


	Three Months Ended March 31,
Dollars in millions	2023		2022
Interest expense	$	288	$	326
Royalty and licensing income	(363)		(306)
Royalty income - divestitures	(188)		(171)
Equity investment losses	155		644
Integration expenses	67		105
Loss on debt redemption	—		275
Divestiture gains	—		(211)
Litigation and other settlements	(325)		(37)
Investment income	(102)		(10)
Provision for restructuring	67		23
Other	(12)		11
Other (income)/expense, net	$	(413)	$	649

Interest expense decreased in the first quarter of 2023 compared to the first quarter of 2022 due to additional debt maturities. Refer to "Item 8. Financial Statements and Supplementary Data—Note 10. Financing Arrangements" for further information.
Royalties increased in the first quarter of 2023 primarily due to higher Keytruda* and diabetes business divestiture royalties. Refer to "Item 8. Financial Statements and Supplementary Data—Note 4. Divestitures, Licensing and Other Arrangements" for further information.
Equity investments generated lower losses in the first quarter of 2023 compared to the first quarter of 2022 primarily driven by fair value adjustments for investments that have readily determinable fair value. Refer to "Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements" for more information.
Integration expenses decreased in the first quarter of 2023 primarily due to lower consulting fees to implement Celgene integration initiatives related to processes and systems.
Loss on debt redemption during the first quarter of 2022 resulted from the early redemption of long-term debt of $5.2 billion.
Divestiture gains during the first quarter 2022 resulted from the divestiture of product rights for several mature products.
Litigation and other settlements include $400 million of income related to the Nimbus' TYK2 program change of control provision and additional settlement costs related to commercial disputes regarding intellectual property matters in the first quarter of 2023 and $40 million of income resulting from a settlement resolving all legal claims and business interests relating to Nimbus' TYK2 inhibitor in the first quarter of 2022.
Investment income increased during the first quarter of 2023 primarily due to higher interest rates.
Provision for restructuring includes exit and other costs primarily related to certain restructuring activities discussed further at "Item 8. Financial Statements and Supplementary Data—Note 6. Restructuring".

Income Taxes


	Three Months Ended March 31,
Dollars in millions	2023			2022
Earnings before income taxes	$	2,770		$	1,687
Provision for income taxes	503			404
Effective tax rate	18.2		%	23.9		%

Impact of specified items	(2.7)		%	(8.0)		%
Effective tax rate excluding specified items	15.5		%	15.9		%

The 5.7% decrease in our effective tax rate is primarily due to jurisdictional earnings mix resulting from amortization of acquired intangible assets, equity investment losses, litigation and other settlements, as well as releases of income tax reserves of $89 million related to the resolution of Celgene's 2009-2011 IRS audits, partially offset by the impact of changes in our Puerto Rico tax decree that eliminated a previously creditable excise tax.

The 0.4% decrease in Non-GAAP tax rate was due to the aforementioned tax reserve releases, partially offset by changes to our Puerto Rico tax decree.

Non-GAAP Financial Measures

Our non-GAAP financial measures, such as non-GAAP earnings and related EPS information, are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded from non-GAAP earnings and related EPS information because the Company believes they neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods, including (i) amortization of acquired intangible assets, including product rights that generate a significant portion of our ongoing revenue and will recur until the intangible assets are fully amortized, (ii) unwind of inventory purchase price adjustments, (iii) acquisition and integration expenses, (iv) restructuring costs, (v) accelerated depreciation and impairment of property, plant and equipment and intangible assets, (vi) costs of acquiring a priority review voucher, (vii) divestiture gains or losses, (viii) stock compensation resulting from acquisition-related equity awards, (ix) pension, legal and other contractual settlement charges, (x) equity investment and contingent value rights fair value adjustments (including fair value adjustments attributed to limited partnership equity method investments), (xi) income resulting from the change in control of the Nimbus Therapeutics TYK2 Program and (xii) amortization of fair value adjustments of debt acquired from Celgene in our 2019 exchange offer, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. We also provide international revenues for our priority products excluding the impact of foreign exchange. We calculate foreign exchange impacts by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in Exhibit 99.1 to our Form 8-K filed on April 27, 2023 and are incorporated herein by reference.

Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors' overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. This information is not intended to be considered in isolation or as a substitute for the related financial measures prepared in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our consolidated financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Specified items were as follows:


	Three Months Ended March 31,
Dollars in millions	2023		2022
Inventory purchase price accounting adjustments	$	53	$	52


Site exit and other costs	1		—
Cost of products sold	54		52


Site exit and other costs	—		2
Marketing, selling and administrative	—		2

IPRD impairments	20		40
Priority review voucher	95		—
Inventory purchase price accounting adjustments	—		87


Research and development	115		127

Amortization of acquired intangible assets	2,256		2,417

Interest expense(a)	(14)		(27)
Equity investment losses	150		643
Integration expenses	67		105
Divestiture gains	—		(211)
Loss on debt redemption	—		275
Litigation and other settlements	(335)		(40)
Provision for restructuring	67		23
Other	(5)		—
Other (income)/expense, net	(70)		768

Increase to pretax income	2,355		3,366

Income taxes on items above	(293)		(398)


Increase to net earnings	$	2,062	$	2,968

(a) Includes amortization of purchase price adjustments to Celgene debt.

The reconciliations from GAAP to Non-GAAP were as follows:


	Three Months Ended March 31,
Dollars in millions, except per share data	2023		2022
Net earnings attributable to BMS used for diluted EPS calculation – GAAP	2,262		$	1,278
Specified items	2,062		2,968
Net earnings attributable to BMS used for diluted EPS calculation – Non-GAAP	$	4,324	$	4,246

Weighted-average common shares outstanding – diluted	2,113		2,164



Diluted earnings per share attributable to BMS – GAAP	$	1.07	$	0.59
Diluted EPS attributable to specified items	0.98		1.37
Diluted EPS attributable to BMS – Non-GAAP	$	2.05	$	1.96

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Our net debt position was as follows:


Dollars in Millions	March 31, 2023		December 31, 2022
Cash and cash equivalents	$	8,995	$	9,123
Marketable debt securities – current	274		130

Total cash, cash equivalents and marketable debt securities	9,269		9,253
Short-term debt obligations	(2,752)		(4,264)
Long-term debt	(35,078)		(35,056)
Net debt position	$	(28,561)	$	(30,067)

We believe that our existing cash, cash equivalents and marketable debt securities, together with our ability to generate cash from operations and our access to short-term and long-term borrowings, are sufficient to satisfy our existing and anticipated cash needs, including dividends, capital expenditures, milestone payments, working capital, income taxes, restructuring initiatives, business development, business combinations, asset acquisitions, repurchase of common stock, debt maturities, as well as any debt repurchases through redemptions or tender offers. During the first quarter of 2023, our net debt position decreased by $1.5 billion primarily driven by $3.0 billion of cash provided by operations partially offset by $1.4 billion of dividends and common stock repurchases.

During the first quarter of 2023, $1.6 billion of debt matured and was repaid including $750 million 2.750% Notes and $890 million 3.250% Notes.

Under our share repurchase program, we repurchased 3.7 million shares of common stock for $250 million in the first quarter of 2023. The remaining share repurchase capacity under the share repurchase program was $6.9 billion as of March 31, 2023.

During the first quarter of 2023, we paid dividends of $1.2 billion and declared dividend of $0.57 per common share. The decision to authorize dividends is made on a quarterly basis by our Board of Directors.

Annual capital expenditures are expected to be approximately $1.2 billion and 1.4 billion in 2023 and 2024, respectively. We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities, research and development and other facility-related activities.

There were no borrowings outstanding under our $5.0 billion revolving credit facility as of March 31, 2023 and December 31, 2022.

Under our commercial paper program, we may issue a maximum of $5.0 billion unsecured notes that have maturities of not more than 366 days from the date of issuance. There were no commercial paper borrowings outstanding as of March 31, 2023.

Cash Flows

The following is a discussion of cash flow activities:


	Three Months Ended March 31,
Dollars in millions	2023		2022
Cash flow provided by/(used in):
Operating activities	$	2,970	$	3,812
Investing activities	(210)		95
Financing activities	(3,050)		(5,653)

Operating Activities

The $842 million decrease in cash provided by operating activities compared to the first quarter of 2022 was due to changes in working capital requirements reflecting the timing of cash collections and payments in the ordinary course of business.

Investing Activities

The $305 million change in cash used in investing activities compared to 2022 was primarily due to changes in the amount of marketable debt securities held ($529 million), lower divestitures proceeds ($175 million) partially offset by lower Acquired IPRD payments ($316 million).

Financing Activities

The $2.6 billion decrease in cash used in financing activities compared to 2022 was primarily due to lower repurchases of common stock ($4.8 billion) partially offset by changes in net debt borrowings ($1.7 billion) and lower proceeds from stock option exercises ($425 million).

Product and Pipeline Developments

Our R&D programs are managed on a portfolio basis from early discovery through late-stage development and include a balance of early-stage and late-stage programs to support future growth. Our late-stage R&D programs in Phase III development include both investigational compounds for initial indications and additional indications or formulations for marketed products. The following are the developments in our marketed products and our late-stage pipeline since the start of the first quarter of 2023:


Product			Indication			Date			Developments


Opdivo	Melanoma	February 2023	Announced that the FDA has accepted the sBLA and the EMA has validated the Type II variation MAA for Opdivo as monotherapy in the adjuvant setting for the treatment of patients with completely resected stage IIB or IIC melanoma. The submissions were based on results from the Phase III CheckMate -76K trial. In the U.S., the FDA has assigned a PDUFA goal date of October 13, 2023.
NSCLC	March 2023	Ono, our alliance partner for Opdivo in Japan, announced the Japan's Ministry of Health, Labour and Welfare's supplemental approval of Opdivo plus chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC. The approval is based on results from the Phase III CheckMate -816 trial.
March 2023	Announced three-year results from the Phase III CheckMate -816 trial, demonstrating sustained clinical benefits with three cycles of Opdivo in combination with platinum-based chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC. While overall survival (OS) remained immature at this analysis, there was a continued encouraging trend in OS favoring neoadjuvant Opdivo with chemotherapy over chemotherapy alone, long-term improvement in event-free survival (EFS) and time to distant metastasis.
RCC	February 2023	Announced three-year results from the Phase III CheckMate -9ER demonstrating sustained overall survival and objective response rate benefits the treatment with Opdivo in combination with Cabometyx* (cabozantinib) versus sunitinib in the first-line treatment of advanced RCC. In addition, an exploratory biomarker analysis demonstrated that improvements in median progression-free survival and overall survival were sustained regardless of PD-L1 status.
UC	February 2023	Announced three-year results from the Phase III CheckMate -274 trial demonstrating significant sustained clinical benefits with Opdivo for the adjuvant treatment of patients with surgically resected, high-risk muscle-invasive UC and continuous improvement in disease-free survival, non-urothelial tract recurrence-free survival, distant metastasis-free survival and second progression-free survival compared to placebo across all-randomized patients and in patients whose tumor cells express PD-L1 ≥1%.


Reblozyl			Beta Thalassemia			March 2023			Announced EC approval of Reblozyl for the treatment in adult patients of anemia associated with non-transfusion-dependent beta thalassemia. The approval is based on results from the Phase II BEYOND study.


Abecma			Multiple Myeloma			April 2023			Announced with our alliance partner, 2seventy bio, Inc., that the FDA accepted the sBLA for Abecma for the treatment of adult patients with relapsed and refractory multiple myeloma who have received an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. The FDA has assigned a PDUFA goal date of December 16, 2023. The EMA has also validated our Type II variation for the extension of indication for Abecma to treat adult patients with relapsed or refractory multiple myeloma who have received an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. Validation of the application confirms the submission is complete and begins the procedure and scientific assessment. In addition, the Japan's Ministry of Health, Labour and Welfare has accepted our sNDA for Abecma in patients who have received at least two prior therapies, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody, and have experienced disease progression or relapse after the last therapy. The three regulatory applications are based on results from the Phase III KarMMa-3 study.


Product			Indication			Date			Developments


Breyanzi			Lymphoma			March 2023			Announced that the CHMP of the EMA has recommended approval of Breyanzi for the treatment of adult patients with diffuse large B-cell lymphoma, high grade B-cell lymphoma, primary mediastinal large B-cell lymphoma and follicular lymphoma grade 3B, who relapsed within 12 months from completion of, or are refractory to, first-line chemoimmunotherapy. The positive opinion is based on results from the Phase III TRANSFORM trial evaluating Breyanzi compared to the standard of care.
January 2023			Announced positive topline results from the Phase II portion of the TRANSCEND CLL 004, a Phase I/II, open-label, single-arm, multicenter study evaluating Breyanzi in adults with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma. The Phase II portion of the study met the primary endpoint of complete response rate compared to historical control.


Sotyktu			Plaque Psoriasis			March 2023			Announced EC approval of Sotyktu for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy. The approval was based on Phase III POETYK PSO-1 and POETYK PSO-2 clinical trials as well as additional data from the POETYK PSO long-term extension trial.


Camzyos			Obstructive HCM			April 2023			Announced that the CHMP of the EMA has recommended approval of Camzyos for the treatment of symptomatic (New York Heart Association class II-III) obstructive HCM in adult patients. The positive opinion is based on results from the Phase III EXPLORER-HCM and VALOR-HCM trials.


milvexian			Thrombosis			March 2023			Announced with our alliance partner Janssen Pharmaceuticals Inc., the launch of the Phase III Librexia program studying milvexian, an investigational oral factor XIa inhibitor (antithrombotic). The Librexia program will provide important data across three indication-seeking studies: Librexia STROKE, Librexia ACS and Librexia AF. The Librexia STROKE trial will evaluate milvexian in addition to standard of care antiplatelet therapy for stroke prevention in patients after an acute ischemic stroke or high-risk transient ischemic attack. The Librexia ACS trial will evaluate event reduction in acute coronary syndromes in addition to standard of care antiplatelet therapy. The Librexia AF trial will investigate milvexian compared to apixaban in the prevention of stroke in patients with atrial fibrillation.

Critical Accounting Policies

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Our critical accounting policies are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates. For a discussion of our critical accounting policies, refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Form 10-K. There have been no material changes to our critical accounting policies during the three months ended March 31, 2023. For information regarding the impact of recently adopted accounting standards, refer to "Item 1. Financial Statements—Note 1. Basis of Presentation and Recently Issued Accounting Standards."

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (including documents incorporated by reference) and other written and oral statements we make from time to time contain certain "forward-looking" statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. You can identify these forward-looking statements by the fact they use words such as "should," "could," "expect," "anticipate," "estimate," "target," "may," "project," "guidance," "intend," "plan," "believe," "will" and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on our current expectations and projections about our future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years, and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. These statements are likely to relate to, among other things, our goals, plans and objectives regarding our financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products, our business development strategy and in relation to our ability to realize the projected benefits of our acquisitions of Celgene, MyoKardia, and Turning Point, the impact of the COVID-19 pandemic on our operations and the development and commercialization of our products, potential laws and regulations to lower drug prices, market actions taken by private and government payers to manage drug utilization and contain costs, the expiration of patents or data protection on certain products, including assumptions about our ability to retain marketing exclusivity of certain products, and the outcome of contingencies such as legal proceedings and financial results. No forward-looking statement can be guaranteed. This Quarterly Report on Form 10-Q, our 2022 Form 10-K, particularly under the section "Item 1A. Risk Factors," and our other filings with the SEC, include additional information on the factors that we believe could cause actual results to differ materially from any forward-looking statement.

Although we believe that we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report on Form 10-Q not to occur. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise after the date of this Quarterly Report on Form 10-Q.

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