Bristol-Myers 3Q profit rises 2 pct. as sales jump

AP News
Posted: Oct 27, 2011 1:42 PM
Bristol-Myers 3Q profit rises 2 pct. as sales jump

Drugmaker Bristol-Myers Squibb Co. on Thursday reported a 2 percent increase in third-quarter profit, as price increases and higher sales of most key medicines were nearly offset by higher research and marketing spending and taxes.

Bristol-Myers, which sells blockbuster blood thinner Plavix, said net income was $969 million, or 56 cents per share, up from $949 million, or 55 cents per share, a year earlier.

Excluding a $75 million charge for one-time items, adjusted net income was $1 billion, or 61 cents per share, topping the 58 cents a share expected by analysts, who typically exclude one-time items.

Revenue rose 11 percent to $5.35 billion, with a 3 percent boost from favorable currency rates.

New York-based Bristol-Myers said two provisions of the U.S. health care overhaul cut profit by about 4 cents a share, an annual fee on pharmaceutical companies and new discounts for Medicare patients who hit the prescription coverage gap.

Still, Bristol raised the low end of its 2011 profit forecast by a nickel, to $2.25 to $2.30 per share.

"Overall, it was a solid quarter for Bristol. They continue to execute very well (and) arguably they have one of the strongest pipelines in the industry," said Edward Jones analyst Linda Bannister.

CEO Lambertville Andreotti told analysts the company made five important deals recently and had its second straight quarter with double-digit sales growth _ now a rarity for large drugmakers.

"The story at many big drug companies has been that they're cutting expenses because sales are falling," said Erik Gordon, a professor at University of Michigan's Ross School of Business. Bristol, though, is "spending more because they're ramping up sales."

Bristol noted that in September it bought Amira Pharmaceuticals, a developer of treatments for the fatal lung disease pulmonary fibrosis and other disorders. Bristol made deals with three other companies to develop new drugs for cancer, diabetes and other diseases. On Wednesday, it announced a licensing deal to develop a once-a-day HIV pill combining its Reyataz and a Gilead Sciences Inc. drug now in testing.

Also Wednesday, the Food and Drug Administration pushed back its review deadline until Jan. 28 for a much-anticipated new type of diabetes drug. In July, FDA advisers recommended against approving dapagliflozin, developed by Bristol-Myers and partner AstraZeneca PLC, because of higher rates of bladder and breast cancer seen in patient testing. The Type 2 drug works by eliminating excess blood sugar via urine.

Bristol's U.S. sales totaled $3.5 billion; foreign sales hit $1.9 billion.

Sales were led by Plavix, the world's second-best-selling drug, up 8 percent to $1.79 billion. Abilify, for schizophrenia and bipolar disorder, saw sales rise 14 percent to $691 million. HIV drugs Reyataz and Sustiva both increased about 5 percent, for a total of $750 million.

Yervoy, the first drug to improve survival in malignant melanoma patients, had $121 million in sales in its second quarter on the market.

But sales of blood pressure drugs Avapro and Avalide fell 29 percent, to $216 million. That's because they have generic competition in Canada, a rival's similar drug has generic competition in many countries and one of the three dosage forms isn't available since a recall a year ago.

Bristol-Myers and partner Sanofi SA share revenue from Plavix, Avapro and Avalide. All three get U.S. generic competition next spring, which will sharply cut Bristol's revenue.

Bannister noted products bringing about two-thirds of last year's sales get generic competition in the next five years. She doesn't think new products' revenue will be enough to offset those losses.

Spending on marketing, sales and administration jumped 14 percent, to $1 billion, partly because of costs to launch new products, including Yervoy. Research and development costs increased 18 percent, to $973 million, mostly for expensive late-stage human testing.

Bristol's income taxes jumped 52 percent to $475 million.

In early afternoon trading, Bristol-Myers shares rose 13 cents to $32.64.