10-QPeriod: Q2 FY2012

BRISTOL MYERS SQUIBB CO Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 25, 2012For Securities:BMYCELG-RIBMYMP

Summary

Bristol-Myers Squibb Company (BMY) reported a significant decline in net sales for the quarter and six months ended June 30, 2012, primarily driven by the loss of exclusivity for key products like Plavix and Avapro/Avalide. This resulted in a decrease in net earnings attributable to Bristol-Myers Squibb Company from $902 million in Q2 2011 to $645 million in Q2 2012, and from $1.888 billion in the first six months of 2011 to $1.746 billion in the same period of 2012. Despite the revenue pressure from patent expirations, the company continues to invest in its pipeline and has made strategic acquisitions, including the agreement to acquire Amylin Pharmaceuticals for approximately $5.3 billion. Management's strategy focuses on growing newer key marketed products, advancing its R&D pipeline in immuno-oncology, cardiovascular/metabolic disease, and virology, and expanding its presence in emerging markets. The company also highlighted positive developments in key products like Eliquis, Yervoy, and Orencia, and provided updates on ongoing clinical trials and regulatory reviews.

Financial Statements
Beta
Revenue$4.44B
Cost of Revenue$1.25B
Gross Profit$3.20B
R&D Expenses$962.00M
SG&A Expenses$1.00B
Operating Expenses$3.38B
Interest Expense$41.00M
Net Income$645.00M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)1.68B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1Net sales decreased by 18% to $4.44 billion for the three months ended June 30, 2012, compared to $5.43 billion in the prior year, largely due to patent expirations of Plavix and Avapro/Avalide.
  • 2Net earnings attributable to Bristol-Myers Squibb Company fell to $645 million ($0.38 per diluted share) for the quarter ended June 30, 2012, down from $902 million ($0.52 per diluted share) in the same period of 2011.
  • 3The company announced an agreement to acquire Amylin Pharmaceuticals for approximately $5.3 billion, signaling a strategic move into the diabetes and metabolic diseases market.
  • 4Research and development expenses increased slightly to $962 million in Q2 2012 from $923 million in Q2 2011, reflecting continued investment in pipeline development.
  • 5Cash, cash equivalents, and marketable securities stood at $8.77 billion as of June 30, 2012, providing a strong liquidity position.
  • 6The company is actively managing its portfolio, with new product launches and pipeline advancements in key therapeutic areas such as immuno-oncology and cardiovascular/metabolic disease, despite facing significant patent cliffs.
  • 7Costs associated with restructuring and litigation expenses were noted, with a decrease in restructuring provisions and a litigation recovery related to Plavix.
  • 8Despite revenue challenges, the company's strategy includes expanding its presence in emerging markets and focusing on the growth of its newer key marketed products.

Frequently Asked Questions

The primary driver for the significant decline in net sales is the loss of market exclusivity for key products, most notably Plavix and Avapro/Avalide, in major markets like the U.S. This has led to rapid and substantial decreases in sales for these products due to generic competition.

Bristol-Myers Squibb is focusing on a multi-pronged strategy: 1) Growing its newer key marketed products, 2) Advancing its robust R&D pipeline, particularly in immuno-oncology, cardiovascular/metabolic disease, and virology, and 3) Expanding its presence in emerging markets. The planned acquisition of Amylin Pharmaceuticals is also a significant step to diversify its portfolio into the diabetes and metabolic disease area.

The loss of exclusivity for Plavix and Avapro/Avalide has resulted in a substantial decrease in net sales and operating cash flow. For the three months ended June 30, 2012, Plavix net sales decreased by 60% and Avapro/Avalide by 53% compared to the prior year. This trend is expected to continue to impact financial results.

Bristol-Myers Squibb entered into an agreement to acquire Amylin Pharmaceuticals for approximately $5.3 billion in cash, plus assuming its net debt and contractual obligations, totaling around $1.7 billion. Amylin is focused on developing innovative medicines for diabetes and metabolic diseases, and this acquisition is expected to close in the third quarter of 2012. Following the acquisition, AstraZeneca will collaborate on Amylin's portfolio.