TRENTON, N.J. (AP) – Drugmaker Bristol-Myers Squibb Co. reported double-digit jumps in first-quarter sales and profit, beating Wall Street expectations, but it lowered its 2010 profit forecast by a nickel due to the impact of the health care overhaul.
Still, its shares jumped on the results.
The maker of blockbuster blood thinner Plavix posted a very healthy improvement in first-quarter profit, which jumped 16.5 percent to $743 million, or 43 cents per share, from $638 million or 32 cents per share, in the first quarter of 2009.
Excluding restructuring and other one-time charges totaling $224 million, or 13 cents per share, the company’s earnings would have been 56 cents a share. That topped by a nickel what analysts surveyed by Thomson Reuters were expecting, on average.
New York-based Bristol-Myers said its revenue increased 11 percent to $4.81 billion, just above the $4.74 billion analysts were expecting.
Plavix, which Bristol-Myers jointly markets with French partner Sanofi-Aventis SA, produced revenue of $1.67 billion in the quarter, up 16 percent, and six other medicines saw sales jump 15 percent or more.
“A good quarter, with results better than we had originally planned,” Lamberto Andreotti, the chief operating officer who moves up to chief executive next Tuesday with the retirement of CEO James Cornelius, told analysts during a conference call.
There was one big disappointment: The company’s highly touted new Type 2 diabetes drug, Onglyza, had sales of just $10 million in the quarter.
It competes with Merck & Co.’s blockbuster Januvia, both of which are in a newer class of diabetes pills, DPP-4 inhibitors, that increase insulin production and lower the body’s glucose production.
Bristol executives said it has become difficult to launch some new drugs. Companies have to persuade doctors, insurers and patients that the drugs are better, safer and more cost-effective than alternatives – a tough job for diseases like diabetes where a huge number of patients, at least initially, take widely available generic pills that cost as little as $4 per month.
Bristol’s No. 2 drug, schizophrenia treatment Abilify, posted a 5 percent jump in sales to $617 million, and sales of blood pressure drug Avapro increased by 4 percent to $314 million. HIV drugs Reyataz and Sustiva both were up about 15 percent, to $373 million and $335 million, respectively. Nearly every other product showed much stronger growth, from hepatitis B treatment Baraclude, up 42 percent, to cancer drug Sprycel, up 49 percent.
Favorable currency exchange rates also helped, boosting revenue about 3 percent.
At the same time, sales and profit were reduced by 3 cents because of changes required in the health care overhaul enacted in late March and retroactive for the whole quarter: 2 cents for higher rebates paid to the Medicaid program and 1 cent due to the loss of a tax deduction for retiree health care costs.
The company said it expects additional negative impact this year as other discounts in the health law are implemented, such as to cancer hospitals – because three of the company’s dozen drugs are for cancer. Bristol-Myers is estimating an impact of 12 cents per share for the full year.
“In 2011, that we estimate the impact to approximately double at both the top and bottom line,” Chief Financial Officer Charlie Bancroft told the analysts.
Some other major drugmakers recently have said they expect similar hits.
Bristol-Myers is only reducing its earnings-per-share forecast by 5 cents, to a range of $2.10 to $2.20, excluding one-time charges. It had forecast a range of $2.15 to $2.25 in January.
The company believes it can absorb the additional 7-cent impact due to the strength of the overall business and unspecified cost cuts it’s been making in the expectation the overhaul would be enacted.
“Health care reform affects our results, but does not change the underlying strength of our business or the focus of our strategy,” Andreotti said, later adding that his focus is “on top line, top line and top line,” as well as continuing the company’s three-year-old effort to rein in costs and boost productivity.
Date: April 29, 2010
Source: Associated Press