Bristol-Myers Squibb posts 8 percent profit jump

TRENTON, N.J.—Drugmaker Bristol-Myers Squibb Co. on Thursday reported an 8 percent increase in second-quarter profit, beating Wall Street expectations, as the weak dollar boosted foreign sales and several key drugs saw big jumps in U.S. sales. Shares were up nearly 2 percent.

The New York-based maker of blood thinner Plavix and Enfamil infant formula said it plans to make an additional $1 billion in cost cuts by 2012 -- on top of the $1.5 billion productivity program announced last December. The earlier restructuring is intended to cut about 10 percent of company jobs; details on the newest one are to be announced by year's end, but savings are expected to come mainly from more job cuts, procurement savings and streamlining operations by eliminating noncore businesses.

Meanwhile, Bristol-Myers reported net income of $764 million, or 38 cents per share, up from $706 million, or 36 cents per share, in the second quarter of 2007.

Excluding income from a business being sold and a host of one-time charges for plant shutdowns, productivity improvements, an acquisition and other items, the company had income of $903 million, or 43 cents per share.

Revenue totaled $5.2 billion, up 16 percent from $4.47 billion in the year-ago period.

Analysts surveyed by Thomson Financial, on average, expected earnings per share of 40 cents and revenue of $5.09 billion. They typically exclude one-time items.

Bristol-Myers, the world's No. 14 pharmaceutical company by sales, reaffirmed its 2008 earnings forecast of $1.36 to $1.46 per share, including one-time items.

"It was a great quarter, probably the best since I've been here," Chief Executive Officer James Cornelius, who took over in September 2006, told analysts during a conference call.

He said the company will strategically cut spending ahead of patent expiration starting in 2012, is honing in on possible acquisitions and alliances in disease clusters where it focuses research, and has sharply boosted ad spending for key products, particularly in this country, and will do so for the rest of the year.

"I believe we're well on our way to being a next-generation 'biopharma' company," Cornelius said.

The company recorded $42 million in earnings from discontinued operations, related to its April deal to sell ConvaTec, its high-tech dressing and wound-care business, for about $4.1 billion by August.

Pharmaceutical sales rose 16 percent to $4.5 billion, mainly due to U.S. sales increases for Plavix, bipolar disorder treatment Abilify, the HIV drugs Sustiva and Reyataz, Baraclude for hepatitis B, and recently launched Orencia for rheumatoid arthritis and Ixempra for advanced breast cancer.

Top seller Plavix posted a 17 percent jump in sales, to $1.39 billion, as U.S. sales jumped 19 percent. Sales rose 13 percent to $335 million for blood-pressure drug Avapro, jumped 28 percent to $529 million for Abilify, and rose by double digits for colorectal cancer treatment Erbitux and the HIV medicines.

Sales of nutritional products, including Enfamil, totaled $728 million.

Also during the quarter, Bristol-Myers bought Kosan Biosciences Inc., a Hayward, Calif., company developing novel cancer treatments, and took a $32 million charge for research and development acquired in the deal.

The Kosan purchase is the third transaction under the company's "String of Pearls" strategy of making deals to acquire compounds, pipelines or companies that fit 10 major diseases it's made a priority. In May, Bristol-Myers licensed a compound for treating heart attacks, and in October it bought a biotech company called Adnexus Therapeutics.

Chief Financial Officer Jean-Marc Huet said Bristol-Myers has already begun making more than one-third of the cuts identified under the $1.5 billion restructuring.

Bristol-Myers has promised 15 percent annual earnings-per-share growth from 2007 through 2010 but faces what executives call "the cliff years" of 2012-13. Plavix loses patent protection in the second quarter of 2012, and at the end of that year, Bristol-Myers loses its right to sell Abilify in the U.S.

For the first six months, Bristol-Myers had net income of $1.43 billion, or 72 cents per share, up 2 percent from $1.4 billion, or 71 cents per share, in the prior-year period. Revenue was up 18 percent to $10.1 billion.

In afternoon trading, shares were up 38 cents, or 1.7 percent, at $22.27.

(This version CORRECTS that figures in seventh paragraph include one-time items, rather than excluding them.)