Global Insight Perspective | |
Significance | BMS's revenues in the third quarter of 2007 amounted to US$5.05 billion (up 21.56% y/y). Operating profit jumped 86.42% to US$1.39 billion, and net profit increased by 153.84% to US$858 million. |
Implications | Pharmaceutical sales in the same period were up 24.47% to US$3.93 billion, and were driven by a growth rate of 42% in pharmaceutical sales in the United States, primarily due to increased Plavix sales. |
Outlook | BMS is still counting on solid revenue from Plavix, which could be potentially offset by the outcome of the appeal from generic competitor Apotex and future renewed generic competition. BMS will be focusing on the biologics sector, boosted by the recent acquisition of Adnexus Therapeutics. It has achieved a significant milestone with breast cancer drug Ixempra, which received a green light from the U.S. FDA in October. |
Bristol-Myers Squibb (BMS) can be pleased with its performance in the third quarter of 2007, posting a net profit of US$858 million, up from US$338 million in 2006.
BMS's revenues in the third quarter of 2007 amounted to US$5.05 billion (up 21.56% y/y), while operating profit jumped 86.42% to US$1.39 billion, and net profit saw a 153.84% jump to US$858 million. Marketing, selling and administrative expenses increased by 25% to US$1.2 billion y/y, primarily due to the foreign-exchange impact. Increased spending on direct-to-consumer (DTC) advertising for Plavix and Ixepmpra resulted in higher advertising and product promotion spending, up by 23% to US$351 million. R&D costs increased by 9% to US$827 million, reflecting higher licensing payments and continued investments in late-stage compounds.
Bristol-Myers Squibb: Q3 Financial Results | |||
Q3 2007 (US$ mil.) | Q3 2006 (US$ mil.) | % Change, Y/Y | |
Total sales | 5,050 | 4,154 | 21.56 |
Pharmaceutical sales | 3,926 | 3,154 | 24.47 |
Cost of sales | 1,622 | 1,465 | 10.70 |
Research and Development | 827 | 756 | 9.39 |
Marketing,Selling and Administrative Costs | 1,214 | 1,189 | 2.10 |
Operating Income | 1,387 | 744 | 86.42 |
Net Income | 858 | 338 | 153.84 |
Total sales | 5,050 | 4,154 | 21.56 |
Source: Bristol-Myers Squibb, except * Global Insight estimate calculated by revenue minus R&D, cost of products sold and marketing, selling and administrative costs. | |||
Pharmaceutical Sales Growth Drives Revenues
Sales growth was primarily driven by growth in pharmaceutical sales (up 24% y/y) to US$3.9 billion, including a 3% favourable exchange impact. Pharmaceutical sales in the United States increased by 42% y/y to US$2.3 billion. The company's blockbuster drug, Plavix, which is part of the alliance with French firm Sanofi-Aventis, registered an increase in international sales of 99%, including a 2% favourable foreign-exchange impact, to US$1.25 billion.
Other key earners in the third quarter included the angiotensin II receptor blocker, Avapro/Avalide (anti-hypertensive), with sales growth of 12% to US$309 million, anti-psychotic schizophrenia drug Abilify with a 35% increase to US$420 million, and HIV treatment Reyataz, up 17% to US$273 million.
Bristol Myers Squibb: Q3 2007 Sales of Selected Pharmaceuticals | |||
Q3 2007 (US$ mil.) | Q3 2006 (US$ mil.) | % Change, Y/Y | |
Plavix | 1,254 | 630 | 99% |
Pravachol | 86 | 192 | -55% |
Avapro | 309 | 277 | 12% |
Coumadin | 50 | 53 | -6% |
Virology | |||
Reyataz | 273 | 233 | 17% |
Baraclude | 72 | 22 | ** |
Oncology | |||
Erbitux | 185 | 175 | 6% |
Taxol | 102 | 137 | -26 |
Sprycel | 46 | 11 | ** |
Psychiatric Disorders | |||
Abilify | 420 | 313 | 34% |
Immunoscience | |||
Orencia | 60 | 34 | 76% |
Other Pharmaceuticals | |||
Efferalgan | 71 | 62 | 15 |
Source: Bristol-Myers Squibb ** Change in Excess of 200% | |||
Outlook and Implications
Following on in the third quarter of 2007, BMS's net profit is significantly boosted by the uptake of Plavix, following the U.S. Court ruling to uphold the validity of BMS and Sanofi-Aventis's patent litigation case with Canadian generics manufacturer Apotex (see United States - France: 20 June 2007: Early Relief for Sanofi-Aventis, BMS as U.S. Judge Rules in Favour of Plavix Patent). The situation for now seems to favour BMS and Sanofi-Aventis, but market exclusivity for Plavix will terminate in 2011 and future earnings will depend on the outcome of the Apotex appeal and any new potential generic competition. On the other hand, recent setbacks for Eli Lilly's (U.S.) potential new anti-clotting agent firm up Plavix's position on the market. Japan’s Daiichi-Sankyo and its development partner, Eli Lilly, have suspended enrolment and dosing in two small pharmaco-dynamic studies for prasugrel, an experimental anti-clotting agent. Lilly insists that the news has no bearing on Phase III efficacy data, which are due to be released (see United States - Japan: 25 October 2007: Eli Lilly, Daiichi-Sankyo Suspend Two Prasugrel Tests).
Part of BMS's strategy was to redeploy resources and shift its focus to the growing speciality of biologics medicines with the recent purchase of Adnexus Therapeutics, giving BMS access to a new generation of biologics. With the FDA's approval of breast cancer drug Ixempra (ixabepilone), BMS is gaining momentum in the field of oncology. The company will be focusing its current efforts to market the drug in the United States while it awaits the European Medicines Agency (EMEA)'s decision. The company's short- and medium-term plans will also be dominated by the company's transformation and streamlining, which has begun and will continue over the next three years, with physician staff cuts expected in the coming weeks and in 2008.