What were the main drivers of revenue growth and decline in 2002?

Revenue growth was driven by strong performance in key products like PRAVACHOL (up 8%) and PLAVIX* (up 61%), as well as the inclusion of sales from the acquired DuPont Pharmaceuticals business. However, revenue was negatively impacted by generic competition for products such as GLUCOPHAGE* IR, TAXOL®, and BUSPAR, and a substantial workdown of wholesaler inventories.

What is the significance of the financial restatement and the ongoing investigations?

The company restated its financial statements for prior periods due to accounting errors in revenue recognition related to wholesaler inventories and sales incentives. This restatement highlights material weaknesses in internal controls. Ongoing investigations by the SEC and the U.S. Attorney's Office, stemming from these issues, create uncertainty and potential for further penalties or regulatory actions.

How is the company managing its significant litigation and settlement expenses?

Bristol-Myers Squibb reached agreements in principle to settle substantially all antitrust litigation surrounding TAXOL® and BUSPAR, with expected settlement amounts of $135 million and $535 million, respectively. These amounts were accrued in the financial statements. The company is cooperating with ongoing investigations and acknowledges that further material impacts could arise.

What is the company's strategy regarding research and development?

BMY continues to prioritize R&D, investing $2.2 billion in 2002. The company is focusing on rebalancing its pipeline to support late-stage development and near-term product launches, including ABILIFY* and atazanavir. However, patent expirations and increased generic competition are significant challenges impacting the pharmaceutical segment's performance.

BMY 10-K FY2002 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 28, 2003. Cited figures are marked; the original filing is the authoritative source.

Bristol-Myers Squibb Company (BMY) filed its 10-K for the fiscal year ended December 31, 2002.

The company reported total sales of $18.1 billion^a, a slight increase of 1% over the prior year. Pharmaceutical sales represented the largest segment at 81% of total sales. The company navigated significant challenges, including a major restatement of its financial statements for prior periods due to errors in revenue recognition related to wholesaler inventories and sales incentives.

This restatement impacted periods from 1999 through the second quarter of 2002. Despite these accounting issues and ongoing litigation, BMY continued to invest heavily in research and development ($2.2 billion^b in 2002), launching new products like ABILIFY* and securing approvals for new indications for existing products.

However, patent expirations on key products like GLUCOPHAGE* IR, TAXOL®, and BUSPAR in the U.S. impacted revenue and profitability. The company also reported substantial litigation settlement charges and faced investigations from the SEC and the U.S. Attorney's Office related to its inventory management and sales practices.

02—Key points

Key Highlights

Total sales reached $18.1 billion, a 1% increase year-over-year, with the Pharmaceuticals segment accounting for 81% of revenue.
The company restated prior financial statements due to errors in revenue recognition concerning wholesaler inventories and sales incentives, primarily affecting 1999-2002.
Significant investments in R&D ($2.2 billion) supported new product launches (e.g., ABILIFY*) and new indications for existing drugs.
Patent expirations on key products like GLUCOPHAGE* IR, TAXOL®, and BUSPAR led to increased generic competition and impacted sales.
The company incurred substantial charges related to litigation settlements, notably for TAXOL® ($135 million) and BUSPAR ($535 million).
Investigations by the SEC and U.S. Attorney's Office into inventory and accounting practices are ongoing.
The company acquired DuPont Pharmaceuticals for $7.8 billion in October 2001, which contributed to sales but also involved significant R&D write-offs.

03—Questions

Frequently Asked Questions

What were the main drivers of revenue growth and decline in 2002?
Revenue growth was driven by strong performance in key products like PRAVACHOL (up 8%) and PLAVIX* (up 61%), as well as the inclusion of sales from the acquired DuPont Pharmaceuticals business. However, revenue was negatively impacted by generic competition for products such as GLUCOPHAGE* IR, TAXOL®, and BUSPAR, and a substantial workdown of wholesaler inventories.
What is the significance of the financial restatement and the ongoing investigations?
The company restated its financial statements for prior periods due to accounting errors in revenue recognition related to wholesaler inventories and sales incentives. This restatement highlights material weaknesses in internal controls. Ongoing investigations by the SEC and the U.S. Attorney's Office, stemming from these issues, create uncertainty and potential for further penalties or regulatory actions.
How is the company managing its significant litigation and settlement expenses?
Bristol-Myers Squibb reached agreements in principle to settle substantially all antitrust litigation surrounding TAXOL® and BUSPAR, with expected settlement amounts of $135 million and $535 million, respectively. These amounts were accrued in the financial statements. The company is cooperating with ongoing investigations and acknowledges that further material impacts could arise.
What is the company's strategy regarding research and development?
BMY continues to prioritize R&D, investing $2.2 billion in 2002. The company is focusing on rebalancing its pipeline to support late-stage development and near-term product launches, including ABILIFY* and atazanavir. However, patent expirations and increased generic competition are significant challenges impacting the pharmaceutical segment's performance.

04—Continue

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