Physicians' Financial News: January 2008

By Matthew Mahady
Published: Friday, Jun 25, 2010
%u25BA BMS Boasts Bright Oncology Future

Bristol-Myers Squibb (BMS) is one of the world’s largest pharmaceutical companies. The product of a 1989 merger between Bristol-Myers and Squibb, both of the original concerns that comprise the conglomerate have a long and storied history.

Bristol-Myers was officially incorporated on December 13, 1887, with William Bristol as president and John Myers as vice president after the two partners had decided to invest $5,000 into a failing drug manufacturing firm called the Clinton Pharmaceutical Company. Squibb was created in 1858, launched as a family concern.

As BMS grew over time, the company evolved into a large and diversified worldwide concern. Currently, BMS has an employee roster of over 43,000 people and combined annual product sales that approach $18 billion. In addition to becoming a perennial major player in prescription pharmaceuticals, BMS has successfully branched out into related fields, establishing and leveraging subsidiary companies such as Mead Johnson Nutritionals, responsible for various popular consumer products (manufacturing, for example, the ubiquitous baby formula branded as Enfamil); ConvaTec, a leader in the ostomy care and wound therapeutics sectors; and Bristol-Myers Squibb Medical Imaging.

Recent History Marked by Hurdles

Throughout the 1990s, fortunes of the company soared on the strength of blockbuster products such as Pravachol, a cardiovascular agent; Glucophage, an oral therapy indicated for type 2 diabetes; and Plavix, an antiplatelet agent.

It was also during this time period that BMS gained increasing renown throughout the oncology sector, largely on the strength of Taxol, an ovarian, breast, bone (Kaposi’s Sarcoma), and lung cancer treatment agent touted on the company’s website as “one of the world’s most widely used cancer treatments.”

The early 2000s were a bit of a rocky period for BMS. Company personnel endured lay-offs and share prices of BMS stock fell sharply as several of its highest selling drugs lost patent protection and few new agents emerged from the BMS pipeline to take their place. The company also had to contend with new sources of competition and marketshare encroachment resulting from the dramatic growth and innovation of the biotechnology industry. Just before 2001, the per-share price of BMS stock was approaching $75 per share. A little over a year later, by early 2002, it had fallen in value to less than $30 per share.

Research-Fueled Rebound

Over the past several years, however, the traditional pharmaceutical house has surprised many analysts with its flexibility and responsiveness to the rapidly changing landscape of the pharmaceutical marketplace. As the drug market has undergone seismic changes and shifts, BMS has reinvented itself, transforming its tactical focus via a series of strategic acquisitions, collaborations, and a re-emphasis on research and development.

Wall Street has taken notice to the extent that BMS’s stock price has stabilized. The equity spent 2007 fluctuating between $26 and $32 per share. In fact, from mid-to-late summer in 2007, the stock rose to exceed $32 per share, a price it maintained or nearly maintained for several weeks. The summer 2007 peak represented the highest that BMS stock had climbed in over 5 ½ years. (At the time this article went to press, BMS stock was hovering at just under $30 per share.)

Under BMS’s current business paradigm, collaborative partnership arrangements to co-market and co-develop drugs with other pharmaceutical and biotechnology companies have come to play a major role in the growth of BMS’s drug pipeline and product offerings. According to a BMS spokesperson, products resulting from intercompany alliances now drive over 50% of their total drug sales.

Major recent alliances include a cardiovascular disease collaboration with Isis Pharmaceuticals, Carlsbad, California; a deal with Pfizer, New York City, to develop and commercialize anticoagulant and metabolic compounds; and an agreement with AstraZeneca, London, to product and market diabetes compounds.

The BMS commitment to new drug discovery is reflected in the size of its investment in research and development–related resources. Currently, the company’s research and development department employs over 7,000 people at four major U.S. facilities (supplemented by numerous other facilities distributed throughout the world).

According to BMS executives, the research reorientation of the last few years is not merely a matter of building a colossus-sized staff of scientists. It also entails a shift in the type of research being undertaken as BMS R&D places more and more of its emphasis upon high-risk, pioneering disciplines such as genomics and pharmacogenomics.

The result, according to numerous analysts, has been a more nimble and streamlined but still deep-pocketed operation that has effectively and efficiently transitioned itself— utilizing formidable industry alliances and a burgeoning pipeline—to meet the competitive challenges of today and tomorrow.

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