10-QPeriod: Q3 FY2011

BRISTOL MYERS SQUIBB CO Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 27, 2011For Securities:BMYCELG-RIBMYMP

Summary

Bristol-Myers Squibb Company (BMY) reported strong financial results for the third quarter and the first nine months of 2011, with net sales increasing by 11% and 10% respectively, compared to the prior year periods. This growth was driven by a combination of higher sales volumes and increased average selling prices across many of its key products, including PLAVIX, ABILIFY, and SPRYCEL. The company also saw significant contributions from newer products like YERVOY and NULOJIX. Despite strong revenue growth, the company faces significant headwinds, most notably the upcoming loss of exclusivity for its largest product, PLAVIX, in May 2012, which is expected to lead to a material decline in sales and profitability. Management is actively pursuing strategic initiatives, including pipeline advancement and acquisitions like Amira Pharmaceuticals, to offset this anticipated impact. Investors should monitor the company's progress in navigating patent expirations and diversifying its revenue streams.

Financial Highlights

57 data points
Beta

Revenue

$5.34B

73.7% Gross Margin

Net Income

$969.00M

18.1% Net Margin

EPS (Diluted)

$0.56

Total Assets

$32.01B

Cash & Equivalents

$4.47B

Free Cash Flow

$1.61B

Financial Statements
Beta
Revenue$5.34B
Cost of Revenue$1.41B
Gross Profit$3.94B
R&D Expenses$973.00M
SG&A Expenses$1.02B
Operating Expenses$3.52B
Operating Income$969.00M
Interest Expense$40.00M
Net Income$969.00M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)1.70B
Shares Outstanding (Diluted)1.72B

Key Highlights

  • 1Net sales increased by 11% to $5.35 billion for Q3 2011 and by 10% to $15.79 billion for the first nine months of 2011, compared to the prior year periods.
  • 2Diluted Earnings Per Share (EPS) increased to $0.56 for Q3 2011 and $1.66 for the first nine months of 2011, up from $0.55 and $1.51 respectively in the prior year.
  • 3Significant product growth was observed in PLAVIX (8% in Q3, 9% year-to-date), ABILIFY (14% in Q3, 9% year-to-date), and SPRYCEL (47% in Q3, 42% year-to-date), with new product launches like YERVOY and NULOJIX contributing positively.
  • 4The company acquired Amira Pharmaceuticals for $325 million in cash plus contingent payments to bolster its pipeline in fibrotic diseases.
  • 5BMY highlighted the upcoming loss of exclusivity for its largest product, PLAVIX, in May 2012, which is expected to significantly impact future revenue and earnings.
  • 6Effective tax rate increased to 26.0% for Q3 2011 and 25.2% for the year-to-date, compared to 19.3% and 21.2% respectively in the prior year, due to an unfavorable earnings mix and other factors.
  • 7Total assets grew to $32.01 billion as of September 30, 2011, up from $31.08 billion at December 31, 2010, driven by an increase in marketable securities and goodwill.

Frequently Asked Questions

The primary driver of revenue growth is the increased sales volume and higher average net selling prices for key products such as PLAVIX, ABILIFY, and SPRYCEL, as well as contributions from newly launched products like YERVOY and NULOJIX. International sales also benefited from favorable foreign exchange rates.

The most significant near-term risk is the anticipated loss of market exclusivity for PLAVIX, the company's largest product, in May 2012. This event is expected to lead to a substantial decline in sales and profitability. Additionally, ongoing healthcare reforms in the U.S. and pricing pressures in European markets present ongoing challenges.

The company is focused on several strategic initiatives, including advancing its drug pipeline, acquiring new assets like Amira Pharmaceuticals to diversify its portfolio, and optimizing its existing product sales. They are also looking to expand their biologics capabilities and focus on emerging markets.

The company has been engaged in extensive patent litigation regarding PLAVIX. While the validity and enforceability of key patents have been upheld in the U.S. and other jurisdictions, the patent protection for PLAVIX in the U.S. is set to expire on May 17, 2012, paving the way for generic competition.