Bristol-Myers’ Q2 Earnings Jolted By Patent Cliff But Outlook Is Stable

by Trefis Team
Bristol-Myers Squibb
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Bristol-Myers Squibb (NYSE:BMY) has announced its second quarter earnings. As anticipated and indicated in an earlier article the company posted 18% decline in net sales in second quarter, compared to the year-ago quarter, on account of patent expiry of Plavix and Avapro. [1] The company has also lowered its EPS guidance range for 2012 to $1.78 – $1.88. This compares to an EPS of $2.18 in 2011.

However, on the bright side, excluding sales of Plavix and Avapro, net sales for the quarter increased 8%, driven by double-digit sales growth of several other key drugs. Also, the acquisition of Amylin Pharmaceuticals and Erbitux’s approval for first-line of treatment for Colorectal Cancer, in the second quarter, shall aid top line growth and partially offset the revenue loss to be incurred from patent expiry of Plavix and Avapro in the coming months.

We currently have a stock price estimate of $35.70 for the company, marginally above its current market price.

See our complete analysis for Bristol-Myers Squibb here

Patent cliff jolts earnings

Patent for Avapro expired in March 2012 and that for Plavix expired in May 2012. The combined net sales of the two drugs stood at approximately $8 billion in 2011, constituting roughly 38% of the overall sales of the company. As anticipated, sales have declined sharply and significantly post patent expiry due to competition from generics. Net sales for Plavix declined 60% to $741 million in the second quarter of 2012, as compared to the year-ago quarter. And, net sales for Avapro declined 53% in the same period.

As a result, net sales for the company declined 18% to $4.4 billion in the second quarter of 2012, compared to $5.4 billion in the second quarter of 2011.

The company has also lowered its earnings per share guidance range to $1.78 – $1.88 from the earlier indicated $1.90 – $2.00, for 2012. This compares to an EPS of $2.18 in 2011.

But, other key drugs post good growth

However, excluding sales of Plavix and Avapro, sales increased 8% in the second quarter, on a year-over-year basis. The growth was driven by Yervoy, which is an anti-cancer drug and Onglyza, which is an anti-diabetic drug. Sales for Yervoy increased 71% year-over-year and for Onglyza it increased 54% year-over-year.

Other key drugs namely, Baraclude, Sprycel, Orencia and Nulojix, also registered year-over-year sales growth of more than 20%.

Events of second quarter that will help offset revenue loss from patent cliff in remainder of 2012

The company has also been able to achieve approval for Erbitux as a first-line of treatment for Colorectal Cancer during the second quarter. This will add to its sales for remainder of 2012, aiding overall sales growth for the company.

And, the Amylin Pharmaceutical acquisition, announced in the second quarter also provides Bristol-Myers with Bydureon, a once weekly anti-diabetic medication that shall also aid revenue growth and help offset the revenue loss from Plavix and Avapro patent expiry in remainder of 2012.

On the whole, the second quarter of 2012 was widely anticipated to be a tough one for Bristol-Myers due to patent expiry of Plavix, but the company has done well to advance its late stage pipeline and make strategic acquisitions so as to maintain a stable outlook.

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  1. Bristol-Myers Squibb’s Second Quarter Highlighted by the Planned Strategic Acquisition of Amylin Pharmaceuticals and Important Clinical Data in Immuno-Oncology, July 25 2012, []
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