Bristol-Myers Squibb Co., one of the nation's biggest drugmakers, said Thursday that its third-quarter earnings plunged 65 percent because two key drugs struggled with generic competition and results a year-ago were swelled by a one-time gain. It also raised earnings guidance for the year and said one of the government investigations into a patent deal has been expanded.
The company earned $338 million, or 17 cents a share, in the July-September period, compared with $964 million, or 49 cents a share, a year earlier when it sold its U.S. and Canadian consumer products business.
Excluding one-time items such as charges for depreciation and downsizing, the company earned 22 cents a share, beating by 2 cents a share the estimate of analysts polled by Thomson Financial.
Revenue dropped 13 percent to $4.15 billion from $4.77 billion a year ago as two star drugs faced generic competition.
Sales of cholesterol-lowering agent Pravachol sank 64 percent to $192 million because it lost patent protection earlier this year.
Revenue from blood thinner Plavix sales plummeted 36 percent to $630 million because Canadian drugmaker Apotex Inc. launched a generic version of the drug after an agreement to settle patent litigation over the medicine fell apart. A federal court ordered Apotex to stop selling the drug on Aug 31 but the company had flooded the market with cheaper versions of Plavix that were not recalled. Apotex's appeal on the court's injunction is slated for later this month.
In a statement, Bristol-Myers reiterated that it believes there is enough generic Plavix in the market to satisfy market demand for the remainder of the year and part of next year.
The Plavix debacle caused Peter Dolan to lose his job as CEO last month. On the conference call, Jim Cornelius, the company's interim CEO and a board member, said the search for someone to fill the slot permanently has begun but couldn't say when someone would be appointed.
The Plavix settlement sparked investigations by the U.S. Department of Justice and the U.S. Attorney's Office of the District of New Jersey. But Bristol-Myers announced that the investigation by the U.S. Attorney's office has been expanded to include whether the deal violated securities laws. It had already been investigating corporate governance issues related to Bristol-Myers negotiations with Apotex.
Rumors have swirled that Bristol-Myers might be a takeover candidate but Cornelius said, "the company is not for sale" and that it "has a wonderful future as an independent company."
Bristol-Myers also announced that it raised guidance on results from continuing operations for 2006 to between 97 cents and $1.02 a share from no less than 95 cents a share. The company boosted guidance on 2006 earnings excluding specified items to between $1.02 and $1.07 a share from no less than 95 cents a share.
The new guidance is still below what the company was predicting before generic Plavix flooded the market, however. Earlier this year, Bristol-Myers predicted its 2006 earnings after specified items would reach between $1.15 and $1.25 a share, but it lowered that projection to no less than 95 cents a share in September after the Plavix situation.
Bristol-Myers shares fell 66 cents, or 2.8 percent, to $24 in late morning trading on the New York Stock Exchange.