Deliver Your News to the World

Bristol-Myers Squibb Company Reports Financial Results For The Second Quarter And First Half Of 2006


WEBWIRE

- Posts Second Quarter 2006 GAAP EPS of $0.34 and Non-GAAP EPS of $0.35

- Reaffirms 2006 EPS Guidance

- Approvals of SPRYCEL(TM) and ATRIPLA(TM) Highlight Successful Development of Pipeline Compounds

NEW YORK, NEW YORK (July 27, 2006) -- Bristol-Myers Squibb

Company (NYSE: BMY) today reported financial results for the second quarter

and six months ended June 30, 2006 and reaffirmed earnings guidance for the

full year.

Bristol-Myers Squibb posted second quarter 2006 net sales from

continuing operations of $4.9 billion. The company reported second quarter

2006 net earnings from continuing operations of $667 million, or $0.34 per

diluted share, under U.S. Generally Accepted Accounting Principles (GAAP),

compared to $991 million, or $0.50 per diluted share for the same period in

2005. On a non-GAAP basis excluding specified items, second quarter 2006

net earnings from continuing operations were $680 million, or $0.35 per

diluted share, compared to $933 million, or $0.47 per diluted share for the

same period in 2005. The decrease in net earnings in 2006 as compared to

2005 is mainly due to the significantly lower tax rate in 2005 resulting

from the benefits realized from the resolution of a tax audit and a one

time American Jobs Creation Act related tax adjustment, and continued

increased investment in 2006 for pharmaceutical research and development.

"Since the beginning of the year, Bristol-Myers Squibb has launched

four important pharmaceutical products. These include novel treatments for

cancer and rheumatoid arthritis that were discovered in our own labs, one

in-licensed therapy for serious depression in adults, and a once-daily

single tablet regimen for HIV-1 that contains our SUSTIVA(R) product along

with two antiretrovirals from Gilead Sciences" said Peter R. Dolan, chief

executive officer, Bristol-Myers Squibb. "The strong productivity of our

pipeline and continued solid double-digit growth in sales of our key

products PLAVIX(R), ABILIFY(R), REYATAZ(R) and ERBITUX(R), as well as the

solid prospects for our recently approved products, ORENCIA(R),

BARACLUDE(R) and SPRYCEL(TM), are all preparing the company to enter a

period of sustained sales and earnings growth over several years, beginning

in 2007. We intend to sustain this momentum through continued investment in

R&D and new product launches, as we begin to put in place specific plans to

realize a minimum of $600 million in additional annual cost savings by

2008"

For the six months ended June 30, 2006, net sales from continuing

operations increased 1%, despite a 1% unfavorable foreign exchange impact,

to $9.5 billion compared to the first six months of 2005. Under GAAP, net

earnings from continuing operations in the first six months of 2006 were

$1.4 billion, or $0.70 per diluted share, compared to $1.5 billion, or

$0.78 per diluted share for the same period last year. On a non-GAAP basis,

excluding specified items, Bristol-Myers Squibb reported net earnings from

continuing operations of $1.3 billion, or $0.67 per diluted share for the

six months ended June 30, 2006, compared to $1.6 billion, or $0.81 per

diluted share for the same period last year.

NEW PRODUCT AND PIPELINE DEVELOPMENTS

In May, the U.S. Food and Drug Administration (FDA) approved a

supplemental Biologics License Application (sBLA) that permits a third

party to manufacture ORENCIA(R) (abatacept) at an additional facility.

ORENCIA(R) is a novel biologic agent for the treatment of rheumatoid

arthritis that was launched in the U.S. in February. The facility will

support increased production capacity necessary to meet expected long-term

demand for ORENCIA(R). As a result, the company expanded from a

single-source distribution system, which will enable physicians and

healthcare providers to more easily obtain ORENCIA(R) through their normal

supply channels. Initial market reaction to ORENCIA(R) has been positive,

and the company expects to see continued growth as physicians, healthcare

professionals and patients become more familiar with ORENCIA(R).

On June 28, the FDA granted accelerated approval of SPRYCEL(TM)

(dasatinib), an oral inhibitor of multiple tyrosine kinases, for the

treatment of adults with chronic, accelerated, or myeloid or lymphoid blast

phase chronic myeloid leukemia (CML) with resistance or intolerance to

prior therapy, including GLEEVEC(R) (imatinib mesylate). The FDA also

granted approval of SPRYCEL(TM) for the treatment of adults with

Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ALL) with

resistance or intolerance to prior therapy. Ph+ALL is a rapidly progressive

cancer of the blood and bone marrow, usually occurring in adults.

In June, the company also received approval from the European

Commission for BARACLUDE(R) for the treatment of chronic hepatitis B virus

infection. BARACLUDE(R) was also approved in Japan in July. BARACLUDE(R) is

currently approved in more than 40 countries worldwide, including the

United States and China.

In June, the company announced plans to locate its new large-scale,

expandable, multi-product bulk biologics manufacturing facility in Devens,

Massachusetts, subject to final agreement between the company and the

State. Construction is expected to begin later this year, and the facility

is projected to be operationally complete in 2009. Commercial production of

biologic compounds is anticipated to begin in 2011.

On July 12, Bristol-Myers Squibb and Gilead Sciences, Inc. announced

FDA approval of ATRIPLA(TM) (efavirenz 600 mg/ emtricitabine 300 mg /

tenofovir disoproxil fumarate 200 mg) for the treatment of human

immunodeficiency virus (HIV) infection in adults. ATRIPLA(TM) is the

first-ever once-daily single tablet three drug regimen for HIV intended as

a stand-alone therapy or in combination with other antiretrovirals. The

product combines SUSTIVA(R) (efavirenz), manufactured by Bristol-Myers

Squibb, and TRUVADA(R) (emtricitabine and tenofovir disoproxil fumarate),

manufactured by Gilead Sciences.

SECOND QUARTER RESULTS

-- Second quarter 2006 net sales from continuing operations remained

constant at $4.9 billion compared to the same period in 2005. U.S. net

sales increased 5% to $2.8 billion for the quarter compared to 2005,

driven by the strong performance of pharmaceutical growth drivers and

nutritional products, while international net sales decreased 7% to

$2.1 billion.

-- Marketing, selling and administrative expenses decreased by 7% to

$1.2 billion in the second quarter of 2006 compared to the same period

in 2005, mainly due to the reclassification of certain costs from

marketing, selling and administrative expenses to cost of products sold

and lower sales force expenses resulting from the previously announced

restructuring of the U.S. primary care sales organization that became

effective in March 2006.

-- Advertising and product promotion spending decreased by 4% to

$352 million in the second quarter of 2006 from $365 million in the

same period in 2005, primarily driven by the divestiture of the U.S.

and Canadian Consumer Medicines business in 2005 and lower spending on

mature brands, despite increased investments in growth drivers and new

products including ORENCIA(R) and SPRYCEL(TM).

-- Research and development expenses increased by 14% to $740 million in

the second quarter of 2006 from $649 million in the same period in

2005, principally reflecting continued investments in late-stage

compounds. Investment in pharmaceutical research and development

equaled 17.8% of pharmaceutical sales in the second quarter of 2006,

compared to 15.6% in the same period in 2005.

-- In the second quarter of 2006, the company recorded pre-tax charges of

$22 million related to the adoption of a new accounting standard for

stock option expensing that became effective on January 1, 2006. The

charges were recorded in cost of products sold, marketing, selling and

administrative expenses, and research and development expenses.

INCOME TAXES

The effective income tax rate on earnings from continuing operations

before minority interest and income taxes was 23.1% and -1.9% for the three

months ended June 30, 2006 and 2005, respectively. The higher effective tax

rate was primarily driven by a net tax benefit in 2005 resulting from the

resolution of certain tax contingencies on the completion of examinations

by the Internal Revenue Service and an adjustment to the tax provision for

the special one-time repatriation of foreign earnings.

SPECIFIED ITEMS

In the three months ended June 30, 2006 and 2005, the company recorded

specified income and expense items that affected the comparability of the

results.

The pre-tax specified items in 2006 included:

* $24 million in charges primarily related to accelerated depreciation,

and downsizing and streamlining of worldwide operations; and

* $14 million income from a settlement of a litigation matter.

The pre-tax specified items in 2005 included:

* $269 million charges for increase in litigation reserves, primarily for

wholesaler inventory and various accounting matters;

* $85 million net charges primarily associated with early debt retirement

costs in connection with the repurchase of the company’s $2.5 billion

Notes due 2006; and

* $295 million income from insurance recoveries, primarily for wholesaler

inventory and various accounting matters.

For additional information on specified items, see Appendix 1. Details

reconciling these non-GAAP amounts with GAAP amounts including specified

items are provided in supplemental materials available on the company’s

website.

PHARMACEUTICALS

Worldwide pharmaceutical sales decreased 1% to $3.9 billion in the

second quarter of 2006 compared to the same period in 2005.

U.S. pharmaceutical sales increased 5% to $2.2 billion in the second

quarter of 2006 compared to the same period in 2005, primarily due to the

continued growth of PLAVIX(R), AVAPRO(R)/AVALIDE(R), ERBITUX(R),

ABILIFY(R), REYATAZ(R) and SUSTIVA(R), and sales of new products EMSAM(R)

and ORENCIA(R), partially offset by the loss of exclusivity of

PRAVACHOL(R). In aggregate, estimated wholesaler inventory levels of the

company’s key pharmaceutical products sold by the U.S. Pharmaceutical

business at the end of the second quarter remained stable at slightly over

two weeks.

International pharmaceutical sales decreased 8% to $1.7 billion for the

second quarter of 2006 compared to the same period in 2005. The sales

decrease was mainly due to a decline in PRAVACHOL(R) and TAXOL(R) sales

resulting from increased generic competition in Europe, partially offset by

increased sales of newer products including REYATAZ(R) and ABILIFY(R). The

company’s reported international sales do not include copromotion sales

reported by its alliance partner, sanofi-aventis, for PLAVIX(R) and

AVAPRO(R)/AVALIDE(R), which continue to show growth in the second quarter

of 2006.

Pharmaceutical Growth Drivers

Worldwide sales of the products that the company views as current and

future growth drivers increased to 56% of worldwide pharmaceutical sales in

the second quarter of 2006, compared to 45% in the same period in 2005.

U.S. sales of these growth drivers accounted for approximately 78% and 66%

of total U.S. pharmaceutical sales in the second quarter of 2006 and 2005,

respectively.

* Sales of PLAVIX(R), a platelet aggregation inhibitor that is part of the

company’s alliance with sanofi-aventis, increased 18% to $1,145 million

in the second quarter of 2006 from $968 million in the same period in

2005, primarily due to increased demand. Estimated total U.S.

prescription demand increased approximately 14% compared to 2005.

* Sales of AVAPRO(R)/AVALIDE(R), an angiotensin II receptor blocker for

the treatment of hypertension, also part of the sanofi-aventis alliance,

increased 9%, including a 1% favorable foreign exchange impact, to

$280 million in the second quarter of 2006 from $258 million in the same

period in 2005. U.S. sales increased 6% to $167 million in the second

quarter of 2006 from $157 million in the same period in 2005, primarily

due to wholesaler inventory fluctuations and higher average net selling

prices. Estimated total U.S. prescription demand increased

approximately 4% compared to 2005, although overall volumes were down

due to changes in customer channel strategy. International sales

increased 12%, including a 2% favorable foreign exchange impact, to

$113 million compared to the same period in 2005.

* Total revenue for ABILIFY(R), an antipsychotic agent for the treatment

of schizophrenia, acute bipolar mania and bipolar disorder, increased

35% to $324 million in the second quarter of 2006 from $240 million in

the same period in 2005. U.S. sales increased 34% to $267 million in

the second quarter 2006 from $200 million in the same period in 2005,

primarily due to higher demand and higher average net selling prices.

Estimated total U.S. prescription demand increased approximately 21%

compared to the same period last year. Total revenue for ABILIFY(R)

primarily consists of alliance revenue representing the company’s 65%

share of net sales in countries where it copromotes with Otsuka

Pharmaceutical Co., Ltd.

* Sales of REYATAZ(R), a protease inhibitor for the treatment of HIV,

increased 29% to $236 million in the second quarter of 2006 from

$183 million in the same period in 2005, primarily due to increased

demand in the U.S. and Europe. Estimated total U.S. prescription demand

increased approximately 18% compared to 2005. European sales increased

42% to $74 million in the second quarter of 2006 from $52 million in the

same period in 2005.

* Sales of ERBITUX(R), which is sold by the company almost exclusively in

the U.S., increased 76% to $172 million in the second quarter of 2006

from $98 million in the same period in 2005, driven by usage in the

treatment of head and neck cancer, an indication that was approved by

the FDA in March 2006, augmented by the continued growth for the

treatment of colorectal cancer. ERBITUX(R) is marketed by the company

under a distribution and copromotion agreement with ImClone Systems

Incorporated.

Other Pharmaceuticals

Pharmaceutical products other than those the company views as current

and future growth drivers are generally more mature products.

* Sales of PRAVACHOL(R), an HMG Co-A reductase inhibitor, decreased 48% to

$323 million in the second quarter of 2006 from $625 million in the same

period in 2005. U.S. sales decreased 64% to $128 million in the second

quarter of 2006 from $353 million in the same period in 2005, mainly as

a result of market exclusivity expiration in April 2006. Estimated

total U.S. prescriptions declined by approximately 58% compared to 2005.

International sales decreased 28%, including a 1% unfavorable foreign

exchange impact, to $195 million in the second quarter of 2006 from

$272 million in the same period in 2005, reflecting generic competition

in key European markets.

* Sales of TAXOL(R), an anti-cancer agent sold almost exclusively in

non-U.S. markets, decreased 20%, including a 2% unfavorable foreign

exchange impact, to $149 million in the second quarter of 2006 from

$186 million in the same period in 2005, primarily due to increased

generic competition in Europe.

* Sales of SUSTIVA(R), a non-nucleoside reverse transcriptase inhibitor

for the treatment of HIV, increased 16% to $193 million in the second

quarter of 2006 from $167 million in the same period in 2005. Estimated

total U.S. prescription growth was approximately 7% for the second

quarter of 2006. On July 12, the FDA approved ATRIPLA(TM), a

combination therapy that includes SUSTIVA(R).

HEALTH CARE GROUP

The combined second quarter 2006 revenues from the Health Care Group

increased 1% to $1,012 million compared to the same period in 2005.

Excluding a 6% unfavorable impact from the divestiture of the U.S. and

Canadian consumer medicines business in the third quarter of 2005, Health

Care Group sales increased 7% in the second quarter of 2006.

Nutritionals

* Worldwide Nutritional sales increased 6%, including a 1% favorable

foreign exchange impact, to $582 million in the second quarter of 2006

from $548 million in the same period in 2005. U.S. Nutritional sales

increased 6% to $282 million in the second quarter of 2006, primarily

due to increased sales of ENFAMIL(R), the company’s best-selling infant

formula. International Nutritional sales increased 7% to $300 million

in the second quarter of 2006, including a 2% favorable foreign exchange

impact, primarily due to increased sales of toddlers and children’s

nutritional products and follow-on formulas.

Other Health Care

* Worldwide ConvaTec sales increased 6%, despite a 1% unfavorable foreign

exchange impact, to $262 million in the second quarter of 2006 from

$247 million in the same period in 2005.

* Worldwide Medical Imaging sales increased 11% to $168 million in the

second quarter of 2006 from $151 million in the same period in 2005.

This increase was due to the growth in the sale of TechneLite(R)

technetium Tc99m Generators, partly resulting from gain in market share

following a competitor’s temporary withdrawal from the market up to

April of this year, and the growth of DEFINITY(R), during a competitor’s

continued temporary withdrawal from the market. CARDIOLITE(R) sales

decreased 3% from the same period in 2005.

2006 GUIDANCE

Bristol-Myers Squibb reaffirms its 2006 full year earnings guidance of

fully-diluted earnings per share from continuing operations to be between

$1.15 and $1.25 on an adjusted non-GAAP basis, which excludes specified

items as discussed under “Use of Non-GAAP Financial Information.”

The company also reaffirms its 2006 fully-diluted earnings per share

range to be between $1.15 and $1.25, when adding back specified items.

These specified items are expected to have no net impact on the company’s

estimated earnings guidance for 2006. Details reconciling adjusted non-GAAP

amounts with the amounts reflecting specified items are provided in

supplemental materials available on the company’s website. This information

does not include other specified items that may occur during the rest of

the year.

Anticipated sales declines due to continued exclusivity losses during

2006 are expected to be more or less offset by growth in sales of the

company’s growth drivers and new products. The gross margin is expected to

stabilize as the relatively high margins realized on the sale of the growth

drivers and certain new products more or less offset lost margins from

older products that have lost or are expected to lose exclusivity. Earnings

will be adversely affected by investment in the development of additional

new compounds, investments to develop and support the introduction of new

products, the impact from the adoption of stock option expensing under the

new accounting standard and the impact on future earnings from the sale of

DOVONEX(R).

As previously disclosed, the company has experienced substantial

revenue losses due to the expiration of market exclusivity protection for

certain of its products. The company expects substantial incremental

revenue losses in 2006, representing continuing declines in revenues from

products that lost market exclusivity in previous years, as well as

declines in revenues of certain additional products that have lost market

exclusivity this year. For 2006, the company estimates reductions of net

sales in the range of $1.4 billion to $1.5 billion from the 2005 levels for

products that have lost exclusivity protection in 2004, 2005 or 2006,

primarily PRAVACHOL(R), TAXOL(R) and CEFZIL(R). The timing and amounts of

sales reductions from exclusivity losses, their realization in particular

periods and the eventual levels of remaining sales revenues are uncertain

and dependent on the levels of sales at the time exclusivity protection

ends, the timing and degree of development of generic competition (speed of

approvals, market entry and impact) and other factors.

The company’s expectations for future sales growth include increases in

sales of PLAVIX(R), which had net sales of $3.8 billion for 2005, and is

currently the company’s largest product ranked by net sales. The

composition of matter patent for PLAVIX(R), which expires in 2011, is

currently the subject of litigation in the United States. As previously

disclosed, the Apotex litigation has been suspended pending possible

finalization of the previously announced proposed settlement among the

parties. The proposed settlement is subject to certain conditions,

including antitrust review and clearance by the Federal Trade Commission

(FTC) and state attorneys general. In the response to concerns raised by

the FTC and state attorneys general to that proposed settlement agreement,

the company, sanofi-aventis and Apotex have amended the agreement. The

modified agreement remains under review by the FTC and the state attorneys

general. There is no assurance that the terms of the modified agreement

will address all the concerns of the FTC or the state attorneys general.

There remains significant risk that antitrust clearance will not be

obtained. In such event, the proposed settlement would be terminated, and

the litigation would be reinstated. If the litigation were reinstated,

sanofi-aventis and Bristol-Myers Squibb intend to vigorously pursue

enforcement of their patent rights in PLAVIX(R). Additional patent

proceedings involving PLAVIX(R) are ongoing in the United States and in

less significant markets for the product. The company continues to believe

that the PLAVIX(R) patents are valid and infringed, and with its alliance

partner and patent-holder sanofi-aventis, is vigorously pursuing these

cases. It is not possible at this time reasonably to assess the ultimate

outcome of these litigations, or the timing of potential generic

competition for PLAVIX(R).

The company learned yesterday that the Antitrust Division of the United

States Department of Justice is conducting a criminal investigation

regarding the proposed settlement of the Apotex litigation described above.

The company and its subsidiaries are the subject of a number of

significant pending lawsuits, claims, proceedings and investigations,

including the matters described above. It is not possible at this time

reasonably to assess the final outcome of these investigations or

litigations. Management continues to believe, as previously disclosed, that

during the next few years, the aggregate impact, beyond current reserves,

of these and other legal matters affecting the company is reasonably likely

to be material to the company’s results of operations and cash flows, and

may be material to its financial condition and liquidity. The company’s

expectations for 2006 described above do not reflect the potential impact

of litigation on the company’s results of operations.

For additional discussion of legal matters including PLAVIX(R) patent

litigation, see "Item 8. Financial Statements and Supplementary Data - Note

17 Legal Proceedings and Contingencies" in the company’s Form 10-Q

Quarterly Report for the period ended March 31, 2006.

Use of Non-GAAP Financial Information

This press release contains non-GAAP earnings and earnings per share

information adjusted to exclude certain costs, expenses, gains and losses

and other specified items. Among the items in GAAP earnings but excluded

for purposes of determining adjusted earnings are: gains or losses from

sale of businesses and product lines; from sale or write-down of equity

investments and from discontinuations of operations; restructuring items

that meet the requirements of SFAS 112 for severance and SFAS 146 for other

exit costs; accelerated depreciation charges under SFAS 144 related to

restructuring items described above; asset impairments; charges and

recoveries relating to significant legal proceedings; upfront and milestone

payments for in-licensing of products that have not achieved regulatory

approval that are immediately expensed; copromotion or alliance charges and

payments for in-process research and development which under GAAP are

immediately expensed rather than amortized over the life of the agreement;

income from upfront and milestone payments that is immediately recognized

for out-licensing of products, including deferred income recognized upon

termination; and significant tax events, including the repatriation of

special dividends pursuant to the American Jobs Creation Act of 2004. This

information is intended to enhance an investor’s overall understanding of

the company’s past financial performance and prospects for the future. For

example, non-GAAP earnings per share information is an indication of the

company’s baseline performance before items that are considered by the

company not to be reflective of the company’s operational results. In

addition, this information is among the primary indicators the company uses

as a basis for evaluating company performance, allocating resources,

setting incentive compensation targets, and planning and forecasting of

future periods. This information is not intended to be considered in

isolation or as a substitute for diluted earnings per share prepared in

accordance with GAAP.

Statement on Cautionary Factors

This press release contains certain forward-looking statements within

the meaning of the Private Securities Litigation Reform Act of 1995

regarding, among other things, statements relating to goals, plans and

projections regarding the company’s financial position, results of

operations, market position, product development and business strategy.

These statements may be identified by the fact that they use words such as

“anticipate”, “estimates”, “should”, “expect”, “guidance”, “project”,

“intend”, “plan”, “believe” and other words and terms of similar meaning in

connection with any discussion of future operating or financial

performance. Such forward-looking statements are based on current

expectations and involve inherent risks and uncertainties, including

factors that could delay, divert or change any of them, and could cause

actual outcomes and results to differ materially from current expectations.

These factors include, among other things, market factors, competitive

product development, pricing controls and pressures (including changes in

rules and practices of managed care groups and institutional and

governmental purchasers), economic conditions such as interest rate and

currency exchange rate fluctuations, judicial decisions and governmental

laws and regulations related to Medicare, Medicaid and healthcare reform,

pharmaceutical rebates and reimbursement, claims and concerns that may

arise regarding the safety and efficacy of in-line products and product

candidates, changes to wholesaler inventory levels, changes in, and

interpretation of, governmental regulations and legislation affecting

domestic or foreign operations, including tax obligations, difficulties and

delays in product development, manufacturing and sales, patent positions

and litigation, including the outcome of the PLAVIX(R) litigation in the

U.S., the ability to realize projected cost savings by 2008 discussed in

this press release and the expiration of patents on certain other products,

and the impact and result of governmental investigations. There can be no

guarantees with respect to pipeline products that future clinical studies

will support the data described in this release, that the products will

receive necessary regulatory approvals, or that they will prove to be

commercially successful. For further details and a discussion of these and

other risks and uncertainties, see the company’s periodic reports,

including current reports on Form 8-K, quarterly reports on Form 10-Q and

the annual report on Form 10-K, furnished to and filed with the Securities

and Exchange Commission. The company undertakes no obligation to publicly

update any forward-looking statement, whether as a result of new

information, future events or otherwise.

Company and Conference Call Information

Bristol-Myers Squibb is a global pharmaceutical and related health care

products company whose mission is to extend and enhance human life.

There will be a conference call on July 27, 2006 at 10:00 a.m. (EDT)

during which company executives will address inquiries from investors and

analysts. Investors and the general public are invited to listen to a live

webcast of the call at http://www.bms.com/ir or by dialing 913-312-1294.

Materials related to the call will be available at the same website prior to the call.

ABILIFY(R) is a trademark of Otsuka Pharmaceutical Company, Ltd.

AVAPRO(R), AVALIDE(R) and PLAVIX(R) are trademarks of sanofi-aventis

Erbitux(R) is a trademark of ImClone Systems Incorporated

EMSAM(R) is a trademark of Somerset Pharmaceuticals, Inc.

GLEEVEC(R) is a trademark of Novartis, Inc.

TRUVADA(R) is a trademark of Gilead Sciences, Inc.

ATRIPLA is a trademark of both Bristol-Myers Squibb Co. and Gilead Sciences, Inc.



WebWireID17469





This news content was configured by WebWire editorial staff. Linking is permitted.

News Release Distribution and Press Release Distribution Services Provided by WebWire.