#11 Bristol-Myers Squibb

345 Park Ave., New York, NY 10154-0037
Tel: (212) 546-4000 Fax: (212) 546-4020
www.bms.com

Headcount	41,000
Year Established	1887
Pharma Revenues	$15,622	+13%
Total Revenues	$19,348	+12%
Net Income	$1,968	+38%
R&D Budget	$3,282	+10%

Top Selling Drugs
Drug	Indication	Sales	(+/-%)
Plavix	platelet inhibitor	$4,755	+46%
Abilify	schizophrenia	$1,600	+25%
Avapro	hypertension	$1,204	+21%
Reyataz	HIV/AIDS	$1,124	+21%
Sustiva	HIV/AIDS	$956	+21%
Erbitux	oncology	$692	+6%

Account for 66% of total pharma sales, up from 58% in 2006.

PROFILE

I thought Bristol-Myers Squibb might take a tumble in the ranks this year, but the restoration of its Plavix revenues — up $1.5 billion from the mess of 2006 — kept the company in the #11 spot. BMS contends that the Apotex/Plavix mess wiped out $1.2-1.4 billion in 2006 revenues and another $250-350 million in 2007. An extra $1.2 billion in revenues would’ve put it in the #10 spot in last year’s rankings, so they should let that be a lesson to them: cheaters never prosper!

Oh, and former senior vice president Dr. Andrew Bodnar is up on charges of lying to federal authorities during their investigation of the Plavix case. Since that case stems from the previous regime at BMS, I’m glad to say that Jim Cornelius’ tenure as chief executive officer and chairman of the company has been free of federal charges! (That may sound like faint praise, but BMS really has had more than its share of legal woes this decade.)

The Lowe Down: BMS Bristol-Myers Squibb doesn’t seem to be very happy with the performance of its research division, if all the rumors of layoffs and reorganizations have something to them. But that doesn’t make them special these days — none of the big pharmas seem all that thrilled with their own productivity. In a way, that’s been the company’s problem: nothing makes it stand out from the crowd. It has no particular therapeutic area where it leads, and — these post-Glucophage, post-Taxol days — no particular blockbuster that people associate with BMS. Attempts to generate one have come, expensively, to grief. So for now it has a fairly unexciting pipeline, but still has some money to spend. BMS is already opening up the wallet to make deals, but if you look around the rest of this list, you can see that a lot of other people are trying to do the same thing. Not even its rebound strategy makes this company distinctive: what to do? —Derek Lowe

The Hole

Now that its legal-ethical house appears to be in order, BMS has plenty of work to do in order to retain its independence. Plavix’s restored numbers helped offset an enormous loss in revenue for Pravachol (from $2.3 billion in 2005 to $443 million in 2007), and schizophrenia treatment Abilify looks like it’ll become a $2.0 billion drug in 2008. But BMS loses the rights to Plavix and Abilify in 2011 and 2012, respectively, so new products and royalty streams are the order of the day.

They have their work cut out for them. The company also had a setback with its melanoma treatment, ipilimumab. In April 2008, BMS and co-developer Medarex elected to hold off on the drug’s BLA after the FDA requested overall survival data from a Phase III trial. The two companies have also asked to change the primary endpoint of the trial to cover overall survival, rather than progression-free survival.

In better-but-still-fraught-with-risk news, BMS and AstraZeneca plan to file an NDA for diabetes treatment Onglyza soon, but analysts consider it a high-risk product and fear it may be delayed or denied. A June 2008 release of Phase III data was lukewarm enough to drive BMS’ stock to a 52-week low (not that I tend to use stock price in these analyses).

BMS also began Phase III trials of apixaban, a Plavix-replacer that it’s co-developing with Pfizer.

Big(gish) Biopharma?

So how is BMS preparing for the day (in 2011) when Apotex is legally permitted to sell a generic version of Plavix? By restructuring! Sure, just about every company on our list is restructuring, but BMS has chosen a unique angle. In this case, the company has copped to its position as a mid-cap pharma company and said, “Let’s think smaller.”

Acquisition News Target: Kosan Biosciences Price: $190 million Announced: May 2008 What they said: “Kosan’s technology, coupled with our development and commercialization capabilities, will result in new treatment options for patients, and represents another important milestone in the execution of our strategy to become a next-generation biopharma leader.” —Jim Cornelius, chairman and CEO, BMS Target: Adnexus Therapeutics Price: $430 million Announced: September 2007 What they said: “This investment in biologics discovery complements our continued investment in a growing biologics pipeline and portfolio.” —Jim Cornelius

Instead of trying to bulk up to compete with the big guns, BMS is embracing its (relative) lack of size to pursue what it calls a “next generation BioPharma” model. In December 2007, the company announced its plans to cut the mature product portfolio by 60% in the next four years, close or sell off half of its manufacturing sites, fire 10% of its workforce, and out-license compounds that it doesn’t have the resources to develop.

The new strategy encompasses BMS’s previous Productivity Transformation Initiative (PTI), which was designed to trim $1.5 billion in costs and new expenditures. The PTI will ultimately cost between $0.9 and $1.1 billion. Okay, maybe that doesn’t sound too innovative, but I’m impressed by their recognition of their scale.

In his 2007 letter to shareholders, Mr. Cornelius wrote, “This hybrid approach combines the strengths of a traditional pharmaceutical company — such as its global reach and its integrated commercial and manufacturing infrastructure — with the advantages of agility, entrepreneurial thinking and flexibility that are characteristic of many successful biotechnology companies.” I’m assuming those  “traditional” strengths drove the company’s recent acquisitions of Kosan and Adnexus.

This new strategy led BMS to sell off its non-pharma assets. Avista Capital Partners bought BMS’ medical imaging unit for $525 million in January 2008 and worked with Nordic Capital to acquire BMS’ ConvaTec wound therapeutics and ostomy case portfolio for $4.1 billion in May 2008. In addition, BMS announced plans to spin off 10-20% of its Mead Johnson Nutritionals business in an IPO.

Those of you who make it to the second part of this report will see that I’ve settled on a new definition for “Biopharma.” On those terms, I’m not sure that BMS’ new model is going to lead it into the Top Biopharma ranks (maybe I should launch a Top Specialty Pharma report), but I’m just hoping it’ll involve a real attempt at rethinking the structure and purpose of a pharma company, and not simply be a cover for cutting fat.

If BMS can truly blaze a new trail for development partnering and figure out how to “build flexibility” into a company with a workforce in excess of 40,000, I’ll be awfully impressed, biopharma or not.

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For the full profile, including pipeline and patent information, download the PDF.