Bristol-Myers posts 6 percent drop in 2Q profit on business sale, confirms profit forecasts

Bristol-Myers posts 6 percent drop in 2Q profit

TRENTON, N.J. — Drugmaker Bristol-Myers Squibb Co. said Thursday its second-quarter sales rose slightly but profit was down nearly 6 percent, due to the loss of income from its former nutrition business, spun off late last year.

Bristol, which sells blockbuster blood thinner Plavix and Abilify for psychiatric disorders, managed to beat analysts’ profit estimates by a penny per share. But its revenue just missed their expectations.

The New York-based company confirmed profit forecasts issued a few months ago for 2010 and 2013 despite recent factors that are cutting into revenue.

Bristol-Myers reported net income of $927 million, or 53 cents per share. A year earlier, it earned $983 million, or 49 cents per share — when there were millions more shares.

Revenue totaled $4.77 billion, up about 2 percent from $4.67 billion in 2009’s second quarter.

Analysts surveyed by Thomson Reuters expected revenue of $4.86 billion and earnings per share of 53 cents, excluding one-time items. Bristol earned 54 cents a share, excluding restructuring and research-licensing costs.

Excluding the spun-off Mead Johnson infant formula business, Bristol’s $927 million in income was up 5 percent from $880 million a year earlier.

“As our results demonstrate, operationally things are going well,” Chief Executive Lamberto Andreotti told analysts during a conference call. “The progress we have made in our (drug) pipeline and our focus on productivity give us confidence” we can meet profit forecasts, he added.

The company has even started a new $3 billion stock repurchase program, Andreotti noted.

In afternoon trading, shares of Bristol-Myers rose 22 cents to $24.97.

“Overall a reasonable, quiet quarter,” BernsteinResearch analyst Timothy Anderson wrote to investors. He said the company has “a two-year window of good growth in 2010/2011, but from 2012-2015 growth is likely to move into negative territory.” That could limit share price increases, he added, “despite the palpable excitement around the company’s pipeline.”

Leerink Swann analyst Seamus Fernandez wrote to investors that Bristol posted “a good quality quarter,” with costs slightly lower and gross profit margin slightly higher than he expected.

Bristol-Myers said it expects profit of $1.84 to $1.94 per share, or $2.10 to $2.20 excluding one-time items, for this year and a minimum of $1.95 per share, excluding one-time items, in 2013.

Bristol-Myers issued the 2013 forecast unusually early in a bid to reassure investors and analysts worried about the “patent cliff” it faces in 2012, when Plavix and blood pressure drug Avapro both lose patent protection. Generic competition will quickly erode their sales.

Plavix, which Bristol sells jointly with France’s Sanofi-Aventis SA, is the world’s second-best-selling prescription medicine. It brought Bristol about $6.1 billion last year, when Avapro had $1.3 billion in sales. Together, they accounted for more than one-third of the company’s $18.8 billion in 2009 revenue.

Since the company first issued the forecasts earlier this year, pressure for lower prices from European government health programs has been increasing, with Greece and Spain demanding higher rebates already and other countries expected to follow.

In addition, the U.S. healthcare overall that passed in late March requires bigger rebates on drugs bought through government programs. Bristol said the U.S. healthcare overhaul reduced net sales by 1.5 percent in the second quarter.

Sales in the quarter were led by Plavix, up 6 percent at $1.63 billion; Abilify at $633 million, and HIV treatments Reyataz and Sustiva, at $357 million and $331 million, respectively. Avapro posted $307 million in sales, down 2 percent.

Cancer drug Sprycel was up 23 percent at $132 million, but the diabetes drug Onglyza, launched last summer with high expectations, posted a mere $28 million in sales.

The company says it expects sales to rise in the mid-single-digit range in the second half of the year.

In December, the company traded away the remaining 170 million shares it had in Mead Johnson to investors who owned Bristol-Myers shares. It then retired those shares, reducing its own outstanding shares, to boost earnings per share this year.

Last month, Bristol-Myers announced a raft of positive news on research on experimental drugs and new uses for existing ones, which should boost sales down the road.

That included strong results for biologic cancer drug ipilimumab, in late-stage testing against advanced melanoma and in midstage testing in lung cancer patients, and a late-stage test of diabetes drug dapagliflozin in patients on insulin that found it reduced their insulin use and their blood sugar. Also, a late-stage study of cardiac drug apixaban in patients with an irregular heartbeat was stopped early due to evidence it reduced risk of stroke and dangerous blood clots.

For the first six months, net income rose 3 percent to $1.67 billion, or 96 cents per share, from $1.62 billion, or 81 cents per share, a year earlier. Revenue climbed 6.5 percent to $9.58 billion from $8.99 billion.