What was the primary driver of the significant decline in Bristol-Myers Squibb's revenue and earnings in the third quarter of 2006?

The primary driver was the 'at-risk' launch of a generic version of PLAVIX® (clopidogrel bisulfate) by Apotex in August 2006, which significantly impacted PLAVIX® sales and led to an estimated $525-$600 million loss in the third quarter. The loss of market exclusivity for PRAVACHOL® also contributed to the decline.

How is the company addressing the legal challenges surrounding PLAVIX®?

Bristol-Myers Squibb and its partner Sanofi are vigorously defending the PLAVIX® patents. A U.S. District Court granted a preliminary injunction to halt further sales of Apotex's generic product, though Apotex has appealed this decision. The trial in the underlying patent litigation is scheduled for January 2007. The company acknowledges that the outcome of these legal proceedings, including the appeal and other patent litigations, could materially impact its financial condition and liquidity.

Which products showed strong performance despite the overall sales decline?

Despite the challenging market conditions, several key products demonstrated robust growth. ABILIFY® sales increased by 20% in the third quarter, REYATAZ® by 32%, ERBITUX® by 64%, and AVAPRO®/AVALIDE® by 10%. The SUSTIVA franchise also saw an 18% increase in total revenue.

What is the company's outlook regarding the impact of generic competition on PLAVIX®?

The company anticipates that generic clopidogrel bisulfate sold into distribution channels will continue to satisfy a significant portion of prescription demand through the remainder of 2006 and will have a residual impact into 2007. The full impact is difficult to estimate and depends on various factors, including the amount of generic product sold, pricing, and the outcome of ongoing litigation. The loss of market exclusivity and sustained generic competition for PLAVIX® is considered material to the company's sales, results of operations, cash flows, and potentially its financial condition and liquidity.

BRISTOL MYERS SQUIBB CO 10-Q Quarterly Report Q3 FY2006

Summary

Bristol-Myers Squibb Company (BMY) reported a significant decline in net sales and earnings for the third quarter and first nine months of 2006 compared to the prior year. This downturn was primarily driven by the "at-risk" launch of generic clopidogrel bisulfate (PLAVIX®), which significantly impacted PLAVIX® sales, and the loss of market exclusivity for PRAVACHOL®. The company also faced increased research and development expenses. Despite these challenges, several key products like ABILIFY®, REYATAZ®, ERBITUX®, and AVAPRO®/AVALIDE® showed strong growth. The company is actively managing legal proceedings, particularly concerning PLAVIX® patent litigation with Apotex, which has led to a preliminary injunction against Apotex's generic product. The outcome of these legal battles and ongoing government investigations remains a significant factor for the company's future performance and financial condition. Management is focused on navigating these challenges while investing in pipeline development and new product launches.

Key Highlights

1Net sales decreased by 13% in Q3 2006 and 3% for the nine months ended September 30, 2006, compared to the prior year periods.
2Earnings from continuing operations significantly declined by 65% in Q3 2006 and 31% for the nine months ended September 30, 2006, largely due to the impact of generic competition for PLAVIX®.
3PLAVIX® sales were severely impacted by the August 2006 'at-risk' launch of generic clopidogrel bisulfate, with an estimated sales loss of $525 million to $600 million in Q3 2006.
4PRAVACHOL® experienced a significant sales decrease of 64% in Q3 2006 due to loss of market exclusivity in the U.S. and generic competition in Europe.
5Key growth drivers like ABILIFY® (up 20% in Q3), REYATAZ® (up 32% in Q3), ERBITUX® (up 64% in Q3), and AVAPRO®/AVALIDE® (up 10% in Q3) demonstrated strong performance.
6Research and development expenses increased by 13% in Q3 2006, reflecting ongoing investments in late-stage compounds.
7The company is involved in significant legal proceedings, notably the PLAVIX® patent litigation, and faces potential material impacts on its financial condition and liquidity.

BRISTOL MYERS SQUIBB CO Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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