Drugmaker Bristol-Myers posts higher 3Q sales, but lower profit due to $2B gain a year ago

Thursday, October 22, 2009

Bristol-Myers posts higher 3Q sales, lower profit

TRENTON, N.J. — Drugmaker Bristol-Myers Squibb Co. on Thursday reported a solid increase in third-quarter revenue, due to strong sales growth for its blockbuster blood thinner Plavix and other key medicines, and boosted its profit forecast.

Higher average drug prices and lower spending on marketing and administration also boosted the performance for the maker of Abilify, which treats schizophrenia and bipolar disorder, and HIV drugs Sustiva and Reyataz.

However, New York-based Bristol-Myers said its net income from July through September was $966 million, down by nearly two-thirds from $2.6 billion a year earlier. That figure was inflated by a one-time, $2 billion gain from the sale of a business. Excluding that, profit was up by 64 percent in the last quarter.

The world’s No. 15 drugmaker by revenue had sales of $5.49 billion, just a hair below the $5.52 billion analysts expected. A year ago, revenue totaled $5.25 billion.

Both totals include profits from the company’s majority interests in Mead Johnson Nutrition Co., $699 million this quarter and $744 million a year ago. In the interim, Bristol-Myers sold about 20 percent of the company in an initial public offering.

Several Bristol-Myers drugs had double-digit sales jumps. Those included Abilify, Orencia for rheumatoid arthritis, leukemia drug Sprycel and hepatitis B drug Baraclude.

Plavix, the world’s second-best-selling drug, had reported sales of $1.55 billion, up 8 percent. Most of that came from the U.S., where sales rose 11 percent, but sales are now under siege from new generic competition that has hit harder than expected in six European countries.

Bristol-Myers splits Plavix revenue in foreign markets with partner Sanofi-Aventis SA and reports that separately as equity income after expenses are deducted. Each company gets roughly $1 billion a quarter in sales. But with recent approval of generic competitors in Germany, France, the United Kingdom and three other countries, and about five more European countries expected to approve generics by the middle of next year, those revenues will start declining.

Generics in the six countries already have taken close to half of market share, said Bristol-Myers Chief Executive Jim Cornelius.

“Eventually they may eliminate the brand completely” in some countries, he said. Plavix has patent protection in the U.S. until 2012.

The company launched its newest drug, Onglyza for diabetes, in the U.S. in August. It produced $20 million in sales by the end of September, and shortly after got approval in the European Union, where it will soon be on sale.

The company posted earnings per share of 48 cents, or 52 cents excluding one-time items. A year ago, it had earnings of 29 cents, or 45 cents without items. Analysts were expecting, on average, earnings per share of 51 cents without items in the latest period.

The company raised its 2009 earnings forecast, to a range of $1.72 to $1.77 per share from $1.58 to $1.68.

In afternoon trading, shares of Bristol-Myers fell 31 cents to $22.38.

In August 2008, Bristol-Myers sold ConvaTec, its high-tech dressing and wound-care business, for $4.1 billion and recorded a $2 billion gain on the sale. The sale was part of a Bristol-Myers’ strategy called the “String of Pearls,” to sell noncore businesses and convert the traditional drugmaker into a biopharmaceutical company by acquiring key biotech assets.

Bristol-Myers bought one of those pearls during the third quarter for $2.1 billion — Medarex Inc., a biotech drugmaker developing treatments for immune system diseases and cancer. The two companies previously had been collaborating on a late-stage drug candidate, ipilimumab, for advanced skin cancer.

Cornelius said he expects to announce new deals in the fourth quarter, “not in the magnitude of Medarex but important for our disease strategy,” which is to focus on drugs for serious illnesses that lack good treatments.

He said this year’s megamergers — Pfizer Inc. just bought Wyeth and Merck & Co. is about to buy Schering-Plough Corp. — hands his company, the smallest of the big drugmakers, a competitive advantage because focusing on new drugs is better than megamergers in the long term.

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