Bristol-Myers swings to 3Q loss as sales plunge
Drugmaker Bristol-Myers Squibb Co. posted a rare loss in the third quarter as U.S. sales hemorrhaged due to new generic competition to blood thinner Plavix and the company took a big charge for a failed research project. The company slashed its profit forecast for the full year, and its shares fell in early trading.
The maker of diabetes drug Onglyza said Wednesday that it lost $711 million, or 43 cents per share. A year ago, the New York-based company posted net income of $969 million, or 56 cents per share.
Excluding the charge, net income would have been $685 million, or 41 cents per share, a penny below analysts' expectations of 42 cents.
Total revenue fell 30 percent, to $3.74 billion, short of the $4 billion analysts anticipated. That was mainly because revenue from blood thinner Plavix, which had been the world's second-best-selling drug until U.S. generic competition hit in May, dropped 96 percent in the July-September quarter to $64 million.
Total U.S. sales dropped an astounding 43 percent, to $2 billion, as generic competition to two other big sellers piled on. Those are blood pressure drugs Avapro and Avalide, whose combined sales fell 56 percent to $96 million.
Fellow drugmaker Eli Lilly likewise was hurt by generic competition — to its all-time best seller, the antipsychotic Zyprexa, whose sales fall 68 percent to $374.5 million. Its net income rose slightly, though, on a drop in expenses and a one-time gain.
Bristol-Myers, the world's 13th-biggest drugmaker by revenue, noted that excluding the hit from generic competition, sales would have been up 7 percent. But its current best sellers, HIV drug Reyataz and Abilify for schizophrenia and bipolar disorder, both saw sales dip by single digits, to $363 million and $676 million, respectively. Newer drugs such as Orencia for rheumatoid arthritis, Sprycel for leukemia and Yervoy for the deadly skin cancer melanoma saw sales climb by 25 percent or more.
The $1.8 billion charge Bristol took was for halting development of a once-promising hepatitis C drug, known as BMS-986094, that had been in midstage patient testing. That study was halted when one participant died of heart failure and eight others were hospitalized.
The drug was part of Bristol's big bet to become a player in the market for hepatitis C drugs, a growing market as more baby boomers are diagnosed with the potentially fatal virus linked to intravenous drug abuse. Bristol-Myers paid $2.5 billion this year to acquire drug developer Inhibitex Inc. to gain that drug and some other experimental ones.
Bristol-Myers, which just lowered its profit forecast in July, did so again. It now expects 2012 earnings per share of 95 cents to $1.05, down from the $1.78 to $1.88 it predicted three months ago. Excluding one-time items, it still expects $1.90 to $2 per share.
In morning trading Wednesday, Bristol shares were down 47 cents, or 1.4 percent, to $32.77, after falling in premarket trading.
BernsteinResearch analyst Dr. Timothy Anderson wrote in a report to investors that most of Bristol's leading products posted sales in the quarter below analysts' consensus forecast. He added that Bristol-Myers has the highest stock valuation among similar drugmakers, which also "could limit the upside to the current share price despite the palpable excitement around the company's pipeline."
"Even assuming a sizeable future revenue contribution from its pipeline, because of various large patent expirations our current model continues to show essentially no growth" in revenue and earnings per share through 2020, Anderson wrote.
CEO Lamberto Andreotti said in a statement that the company "faced challenges in the third quarter" but remains "strong and well-positioned for the future."
He cited the recent acquisition of Amylin Pharmaceuticals Inc., sales performance of key drugs and promising new long-term survival data for Yervoy, along with potential approval of anticlotting drug Eliquis.
Bristol and partner Pfizer Inc. are still awaiting approval of what could be their next multibillion-dollar medicine, Eliquis for preventing strokes and embolisms, or potentially fatal blood clots. The Food and Drug Administration rejected the drug once, the companies submitted new data and the FDA now expects to make a decision by March 17. The drug is also under review in the European Union.
In August, the company completed its $5 billion purchase of diabetes drug maker Amylin, a bid to restore its former position as a top maker of medicines for diabetes, another fast-growing market.
The delay has given a big head start to already-approved drugs in a new generation of anticlotting medicines, Boehringer Ingelheim's Pradaxa and Xarelto from partners Johnson & Johnson and Bayer HealthCare.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma.