Drugmaker Bristol-Myers Squibb on Thursday posted a 45 percent drop in first-quarter profit as reduced spending and a sharply lower tax rate couldn't make up for plunging sales from increased generic competition to blood thinner Plavix.
Revenue from Plavix, which had been the world's second best-selling drug until its U.S. patent expired last May, nosedived 95 percent. That, along with generic competition that cut sales of blood pressure drugs Avapro and Avalide by 78 percent, dragged down total company sales by 27 percent.
New York-based Bristol-Myers Squibb Co. (BMY) said net income was $609 million, or 37 cents a share. That was down from $1.1 billion, or 64 cents a share, in 2011's first quarter.
Excluding charges totaling $70 million, or 4 cents a share, income would have been $679 million, or 41 cents a share. The charges covered restructuring and costs related to acquiring the rights to sell diabetes medicines Byetta and Bydureon, part of the company's effort to boost its share in the fast-growing market for diabetes treatments.
The 41 cents a share just matched the average forecast of analysts polled by FactSet.
Sales totaled $3.83 billion, down from $5.25 billion a year earlier. That was slightly under analyst estimates of $3.88 billion.
"The first quarter was a good start to an important year in which our focus will be on the growth of existing brands, the execution of new launches and the continued delivery of a diverse and sustainable pipeline," CEO Lamberto Andreotti said in a statement.
Andreotti noted that Bristol is now working with partner AstraZeneca PLC (AZN) to start marketing Byetta and Bydureon outside the U.S. They brought in a combined $137 million in the first quarter.
Still, the results were dominated by the plunge in Plavix sales, from $1.69 billion to just $91 million, and in combined sales of Avapro and Avalide, to just $46 million from $207 million.
On the positive side, sales of five of the company's newer medicines jumped 13 percent or more. They were led by a 49 percent rise for melanoma drug Yervoy, to $229 million, and a 26 percent increase for rheumatoid arthritis treatment Orencia, to $320 million. Sales also rose for Baraclude for hepatitis B, to $366 million; leukemia drug Sprycel, to $287 million; and diabetes drugs Onglyza and Kombiglyze, to a combined $202 million.
But sales for schizophrenia drug Abilify fell 16 percent, to $522 million, and sales of Erbitux, for various cancers, dropped 9 percent to $162 million.
During the quarter, Bristol-Myers began selling Eliquis in several countries. The clot-preventing drug, approved in the U.S. on Dec. 28, is part of a new generation of pricey blood thinners already competing fiercely. Initial revenue was only $22 million.
Bristol-Myers markets it jointly with partner Pfizer Inc. (PFE). Two rival drugs had big head starts: Pradaxa from Boehringer Ingelheim, approved in late 2010, and Xarelto from Johnson & Johnson (JNJ) and its partner, Bayer Healthcare, approved in July 2011.
"The Eliquis number is low, but it's very early in the game," said Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business.
He called Bristol-Myers "one of the more boring" pharmaceutical companies, adding, "These days, that's good news."
The company benefited from a steep drop in its tax rate, to 7.6 percent, down from 26.9 percent in 2011's first quarter. Total expenses fell 2 percent to $3.16 billion due to lower spending on marketing and administration and an 18 percent drop in production costs as generic drugs decreased the demand for Plavix, Avapro and Avalide.
Meanwhile, the company's net debt doubled, to $2.12 billion from $1.04 billion.
In morning trading, shares of Bristol-Myers slipped 2.8 percent, or $1.17, to $40.28 while the broader markets were up. For the year to date, the stock has rallied nearly 24 percent.