Drug Setback May Make Bristol-Myers a Takeover Target
With the future of its promising blood-pressure drug now uncertain, Bristol-Myers Squibb Co. may find itself an acquisition target or a merger player, some analysts say.
Bristol-Myers’ hopes of launching Vanlev, a hypertension pill that seemed destined for multibillion-dollar annual sales, were scuttled when federal officials raised concerns that it may cause severe facial swelling and impair breathing in some patients. Those worries led the nation’s third-largest drug maker to withdraw its application for Vanlev on Wednesday until more studies can be completed, a move that should delay launch of the pill until at least late next year.
“A year delay on a potential blockbuster could cause them to think more actively about merging,” said Bob Kirby, an analyst with Edward Jones.
The company is downplaying the need to merge, despite the consolidation wave sweeping the pharmaceutical industry. But the officials aren’t ruling it out.
“We are not looking back or standing still,” Michael Mee, Bristol-Myers’ chief financial officer, said in a conference call Thursday with analysts. “We are looking at all of our options with great intensity.”
Though the company’s first-quarter earnings rose a better-than-expected 15%, most analysts’ focus was clearly on the company’s pipeline of future products--and the future of Vanlev.
Bristol-Myers officials acknowledge they expected to have the drug approved in June, and had no contingency plan for the delay caused after the Food and Drug Administration raised concerns.
On Thursday, a New England Journal of Medicine study raised concerns about another Bristol-Myers drug. It said Plavix, a new blood thinner given to heart patients after angioplasty, in rare cases may trigger a deadly blood disease. Plavix, which had $201 million in sales in the first quarter, is Bristol-Myers’ fastest-selling drug. Bristol-Myers said the side effect was extremely rare and the study would not have a big effect on sales.
The company’s shares have dropped by nearly 25% in the last two days. On Thursday, the stock fell 94 cents to $50 on the New York Stock Exchange, despite the company’s better-than-expected first-quarter earnings.
Bristol-Myers reported earnings of $1.22 billion, or 61 cents per diluted share, on revenue of $5.26 billion, up from $1.07 billion, or 53 cents per share, on revenue of $4.85 billion last year. Results beat analysts’ forecasts by a penny, according to First Call/Thomson Financial.
Sales of the company’s top-selling drug, the cholesterol-lowering pill Pravachol, fell 5% to $461 million. Sales in the beauty-care unit, whose products include Clairol hair dye, fell 4% to $549 million. Sales in the ConvaTec medical-device unit slipped 1% to $162 million.
Balancing these declines were rising first-quarter sales of Taxol, the heart pills Avapro and Plavix and diabetes drug Glucophage. Sales of Glucophage rose 51% to $426 million.
At a Glance
* Glaxo Wellcome said Thursday that it boosted its first-quarter sales by 13% over the same period last year, due partly to strong results for its new asthma drug Seretide and its HIV treatment Ziagen. Quarterly sales grew to $3.36 billion from $3 billion in 1999, the company said.
Sales in the United States rose 22% at constant exchange rates. U.S. sales benefited from an encouraging debut by Lotronex, Glaxo’s drug for irritable bowel syndrome.
A strong performance by other new products, including the flu medicine Relenza, contributed to the result for the first three months of the year.
The company said that earnings growth, excluding costs related to restructuring and to Glaxo’s pending acquisition of drug maker SmithKline Beecham, were broadly in line with its sales growth. Glaxo agreed in January to buy SmithKline in a deal worth about $180 billion.
Shares of Glaxo Wellcome rose 3% to $30.94 in London trading.
* SmithKline Beecham earned a quarterly pretax profit of $888 million, an increase of 12% from the first quarter of 1999 profits of $811 million based on comparable exchange rates, the company announced Thursday.
Strong sales of three drugs introduced last year in the United States--the antibiotic Augmentin, antidepressant Paxil and diabetes drug Avandia--helped lift earnings. However, results for the arthritis treatment Relafen lagged in the face of strong competition.
Sales from ongoing operations rose 11%, at constant exchange rates, to $3.14 billion from $2.89 billion. However, sales slipped 3% if the results for operations that SmithKline sold last year are included in 1999 figures.
Paxil sales rose 24% to $550 million and Augmentin sales grew by 10%, in spite of a dip in European sales, to $504 million.
Shares of SmithKline rose 3%, to $13.89, in London.
* Schering-Plough first-quarter profit rose by 17%, primarily due to increasing sales of its Claritin allergy drug.
Madison, N.J.-based Schering-Plough made $628 million, or 42 cents per share, compared with $539 million, or 36 cents per share, a year ago. Results matched Wall Street analysts’ forecasts, according to First Call/Thomson Financial.
Sales rose 10% to $2.4 billion from $2.2 billion.
The company’s drug sales increased by 12% to $2.02 billion.
Sales of Claritin, the world’s leading allergy drug, rose 18% to $665 million. Sales of Intron A/Rebetron combination therapy for hepatitis C rose by 23% to $336 million. The company’s inhaled steroid Nasonex rose by 26% to $137 million.
Shares of Schering-Plough fell 38 cents to $40.13 on the New York Stock Exchange.
