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Bristol-Myers Reports In Line Earnings

Zacks Equity Research

Bristol-Myers Squibb Company’s (BMY) first quarter 2013 earnings (excluding special items) of 41 cents per share were in line with the Zacks Consensus Estimate. Adjusted earnings in the first quarter of 2013 were however 36% below 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 US in Mar 2012 and May 2012, respectively.

Net sales in the reported quarter decreased 27% to $3.8 billion. The year-over-year decline in revenue was attributable to lower sales of Avapro/Avalide and Plavix. US net sales in the quarter declined 44% to $2 billion. Sales in international markets increased 6% to $1.8 billion. Revenues were just shy of the Zacks Consensus Estimate of $3.9 billion.

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 95% to $91 million in the quarter. Plavix has been co-developed by Bristol-Myers and Sanofi (SNY). US sales of the drug were down 96% to $66 million. The genericization of the drug in the US was responsible for the massive decline.

Sales of Baraclude, one of the top prescribed therapies for hepatitis B virus, came in at $366 million, up 13% year over year. Leukemia drug, Sprycel, registered sales of $287 million, up 24%. Sales of rheumatoid arthritis (:RA) drug, Orencia, stood at $320 million, up 26%, while worldwide sales of HIV treatment Sustiva came in flat at $387 million in the first quarter of 2013. Global sales of another HIV therapy, Reyataz, climbed 1% to $361 million.

Furthermore, Onglyza/Kombiglyze, a type II diabetes treatment, contributed $202 million to sales in the quarter, up 25%.

Global sales of Abilify, approved for the treatment of schizophrenia and depression, decreased 16% to $522 million. The drug performed disappointingly both in the US and international markets. Sales of cancer drug Erbitux were down 9% to $162 million in the first quarter of 2013.

Skin-cancer drug Yervoy, approved in the US and EU in 2011, contributed $229 million to total revenues during the first quarter of 2013, up 49% from the year-ago period.

Hypertension treatment Avapro/Avalide recorded a 78% decline in sales, which came in at $46 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 Sanofi 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 74.5% in the reported quarter as against 75.2% in the comparable quarter of 2012. Adjusted marketing, selling and administrative expenses in the reported quarter were flat at $993 million.

Adjusted research and development expenses for the quarter increased 9.3% to $930 million as Bristol-Myers continues to invest in its pipeline.

2013 Earnings Guidance Backed

Apart from announcing financial results, Bristol-Myers reaffirmed its adjusted earnings guidance for 2013 provided in January. The pharma major still expects adjusted 2013 earnings in the range of $1.78–$1.88 per share. The Zacks Consensus Estimate for 2013 hints at earnings of $1.83 per share, well within the company’s guidance range.

Bristol-Myers carries a Zacks Rank #3 (Hold). Stocks such as Athersys, Inc. (ATHX) and Celgene Corporation (CELG) appear to be more favorably placed. While Athersys carries a Zacks Rank #1 (Strong Buy), Celgene carries a Zacks Rank #2 (Buy).

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