Bloomberg News

Bristol-Myers Raises Forecast as Revenue Exceeds Estimates

July 28, 2011

(Updates with share price in sixth paragraph.)

July 28 (Bloomberg) -- Bristol-Myers Squibb Co., whose best-selling blood thinner Plavix faces generic competition next year, raised its 2011 profit forecast after second-quarter sales of nine of its 10 top drugs exceeded analysts’ estimates.

The New York-based company raised its forecast, excluding certain items, by 10 cents to a range of $2.20 to $2.30 a share, compared with a $2.21 average estimate of 18 analysts surveyed by Bloomberg. Second-quarter revenue jumped 14 percent to $5.43 billion, topping the $5.05 billion average estimate of 13 analysts surveyed by Bloomberg.

Bristol-Myers has been developing new medicines and divesting nondrug businesses as it prepares for U.S. competition to Plavix, whose sales topped analysts’ estimates with a 15 percent gain in the quarter. Its skin-cancer drug, Yervoy, won U.S. approval in March and brought in $95 million in sales, beating estimates. The company said it plans to apply for approval of its next-generation blood thinner, apixaban, in the second half of this year.

“Bristol-Myers remains hands down the best pipeline story among the U.S. and European pharmaceutical companies we cover,” said Tim Anderson, an analyst at Sanford C. Bernstein & Co., in a note to clients today. “2011 is likely to be a buy year.”

Net income for the quarter declined 2.7 percent to $902 million, or 52 cents a share, from $927 million, or 53 cents, a year earlier. Excluding one-time restructuring and tax charges, profit climbed to 56 cents a share, exceeding the 55 cents estimated by 16 analysts surveyed by Bloomberg.

Exchange Rates

Bristol-Myers climbed 44 cents, or 1.5 percent, to $29.05 at 4 p.m. in New York Stock Exchange composite trading. The stock has gained 16 percent in the past 12 months.

Profit for the quarter was tempered by higher taxes and expenses. The effective tax rate was 27 percent, compared with 20 percent a year ago. Marketing, selling and administrative expenses increased 16 percent to $1 billion for the quarter. Research and development costs rose 12 percent to $923 million.

Fees and drug discounts required in the U.S. health-care law passed last year reduced earnings by 3 cents a share and will subtract 25 cents a share for the year, the company said.

Revenue for the quarter was boosted by favorable exchange rates for medicines sold outside the U.S. The dollar fell 14 percent from the end of 2010’s second quarter to June 30 of this year, as measured against a basket of six currencies. The currency adjustment accounted for 4 percentage points of the company’s 14 percent sales growth.

Reiterates Forecast

Bristol-Myers reiterated its 2013 profit forecast of at least $1.95 a share. Analysts estimated $2 a share.

Revenue from Plavix, the world’s second-biggest-selling medicine, was $1.87 billion, beating the average analyst estimate of $1.72 billion. Plavix is co-marketed with Paris- based Sanofi-Aventis SA. The drug faces generic competition in the U.S. in May 2012 and already faces generic challengers in Europe. New York-based Pfizer Inc.’s cholesterol pill Lipitor is the world’s top-selling drug.

Sales of the antipsychotic drug Abilify increased 12 percent to $706 million, topping the $633 million average estimate. Revenue from the HIV drug Reyataz climbed 11 percent to $396 million, and the Sustiva AIDS medicine increased 12 percent to $371 million.

Sales of the Avapro and Avalide treatments for blood pressure fell 18 percent to $251 million. Avalide pills were recalled after a manufacturing glitch was discovered that could reduce the drug’s effectiveness. Two of the three dosages that were recalled were back on the market in February. The third dosage remains unavailable, according to the company.

--Editors: Angela Zimm, Chris Staiti

To contact the reporter on this story: Tom Randall in New York at trandall6@bloomberg.net.

To contact the editor responsible for this story: Reg Gale in New York at rgale5@bloomberg.net.


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