Bristol-Myers Reports In-Line Earnings

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Bristol-Myers Squibb Company’s (BMY) second quarter 2013 earnings (excluding special items) of $0.44 per share were in line with the Zacks Consensus Estimate. Adjusted earnings in the second quarter of 2013, however, declined 8% from the year-ago earnings.

The year-over-year decline in earnings was due to reduced sales of hypertension treatment Avapro/Avalide and blood-thinner Plavix, which went off-patent in the U.S. in Mar 2012 and May 2012, respectively.

Net sales in the reported quarter decreased 9% to $4 billion. The year-over-year decline in revenues was attributable to lower sales of Avapro/Avalide and Plavix. U.S. net sales in the quarter declined 22% to $2 billion. Sales in international markets increased 10% to $2 billion. Revenues were in line with the Zacks Consensus Estimate.

Quarter in Detail

Global net sales of Plavix, an anti-platelet blood thinner, indicated to reduce the risk of heart attack in patients with atherosclerosis (the build-up of plaque and hardening of the arteries), plummeted 94% to $44 million in the quarter. U.S. sales of the drug were down 97% to $18 million. The genericization of the drug in the U.S. was responsible for the massive decline.

Sales of Baraclude, one of the top prescribed therapies for hepatitis B virus, came in at $371 million, up 4% year over year. Leukemia drug, Sprycel, registered sales of $312 million, up 28%. Sales of rheumatoid arthritis drug, Orencia, stood at $352 million, up 21%, while worldwide sales of HIV treatment Sustiva came in at $411 million in the second quarter of 2013, up 6%. Global sales of another HIV therapy, Reyataz, climbed 6% to $431 million.

Furthermore, Onglyza/Kombiglyze, a type II diabetes treatment, contributed $240 million to sales in the quarter, up 40%.

Global sales of Abilify, approved for the treatment of schizophrenia and depression, decreased 21% to $563 million. The drug performed disappointingly both in the U.S. and international markets. Sales of cancer drug Erbitux were down 4% to $171 million in the second quarter of 2013.

Skin-cancer drug Yervoy, approved in the U.S. and EU in 2011, contributed $233 million to total revenue during the second quarter of 2013, up 44% from the year-ago period. Newly launched anti-clotting drug, Eliquis, co-developed with Pfizer Inc. (PFE), posted modest sales of $12 million in the second quarter of 2013.

Hypertension treatment Avapro/Avalide recorded a 52% decline in sales, which came in at $56 million in the reported quarter. Following the genericization of blood thinner Plavix and hypertension therapy Avapro/Avalide in major markets across the globe, Bristol-Myers and partner Sanofi (SNY) revamped their long-standing alliance regarding the drugs. The new agreement is effective from Jan 1, 2013.

Adjusted gross margin as a percentage of net sales stood at 74.4% in the reported quarter as against 75.3% in the comparable quarter of 2012. Adjusted marketing, selling and administrative expenses in the reported quarter were climbed 4% to $1 billion.

Adjusted research and development expenses for the quarter increased 3.7% to $951 million as Bristol-Myers continues to invest in its pipeline.

2013 Guidance Trimmed

Apart from announcing financial results, Bristol-Myers slashed its guidance for 2013 provided earlier. The company now expects adjusted earnings for 2013 in the range of $1.70-$1.78 (old guidance: $1.78–$1.88) per share. The company now expects 2013 global net sales in the range of $16.0-$16.5 billion (old guidance: $16.2–$17.0 billion).

The Zacks Consensus Estimate (pre-earnings) for 2013 hints at earnings of $1.79 on revenues of $16.3 billion. The disappointing guidance had a negative impact on the company’s stock price.

Bristol-Myers carries a Zacks Rank #4 (Sell). However, Jazz Pharmaceuticals (JAZZ) appears to be favorably placed with a Zacks Rank #1 (Strong Buy).

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