2009 Outlook

Looking forward to 2009, Bristol-Myers reaffirmed its GAAP per share earnings guidance of $1.58 – $1.73 and non-GAAP earnings outlook of $1.85 – $2.00 per share.

The company also reaffirmed that it expects non-GAAP earnings per share from continuing operations attributable to the company to grow at a minimum 15% compounded annual growth rate, from the 2007 base through 2010.

“Our operating performance was excellent at both the top and bottom lines,” said James M. Cornelius, chairman and chief executive officer. “We made outstanding strategic progress, taking decisive actions that shift our focus toward future growth as a BioPharma leader. The collaboration agreement we signed with Otsuka gives us improved financial stability in the upcoming years, mitigating some of the volatility we would have otherwise experienced leading up to 2014. We also completed two more transactions that advanced our String of Pearls strategy — expanding our pipelines in virology and cardiology — all while maintaining a strong balance sheet and carefully managing costs. Clearly, we are delivering on our commitments to become a stronger, leaner and more effective enterprise.”

Strategic Update

On April 6, 2009, the company announced an agreement with Otsuka Pharmaceutical, Ltd. to extend the U.S. portion of the companies’ long-standing agreement for the development and commercialization of ABILIFY from the currently scheduled end date of November 2012 until the expected loss of exclusivity in April 2015. In addition, the companies will collaborate on two Bristol-Myers Squibb oncology medicines — SPRYCEL and IXEMPRA.

The extension of the collaboration is one of the most important actions the company has taken to further build its 2013 and 2014 earnings base and address the expected loss of patent exclusivity on PLAVIX and AVAPRO. The collaboration allows Bristol-Myers Squibb to refocus its energies toward longer-term growth goals for 2014 and beyond, improves the company’s overall financial stability while maintaining financial flexibility for the future, and provides an expected bridge to the company’s new neuroscience products.

In February 2009, Mead Johnson Nutrition Company (NYSE: MJN) executed a successful IPO. Bristol-Myers Squibb retains 83% ownership of Mead Johnson, providing the company with financial diversification while enhancing management focus on the BioPharma business.

Since Bristol-Myers Squibb introduced its BioPharma strategy in December 2007, it has delivered on its commitments to transform the company. The company stated it would consider strategic options for its healthcare businesses and has subsequently acted decisively, successfully managing its transition into a next-generation BioPharma company.


Bristol-Myers Squibb posted first quarter 2009 net sales from continuing operations of $5.0 billion, an increase of 3%, or 8% excluding foreign exchange impact, compared to the same period in 2008. BioPharmaceuticals net sales totaled $4.3 billion and sales from Mead Johnson Nutrition Company totaled $693 million in the first quarter of 2009, representing an increase of 3% and a decrease of 1%, respectively, compared to 2008.

U.S. BioPharmaceuticals net sales increased 13% to $2.8 billion in the first quarter of 2009 compared to the same period in 2008. International BioPharmaceuticals net sales decreased 11%, or increased 2% excluding foreign exchange impact, to $1.5 billion.

Gross profit improved to 71.8% of net sales in the first quarter 2009 compared to 67.9% in 2008. The improvement was driven by higher manufacturing rationalization charges in 2008, favorable foreign exchange impact, cost improvements, favorable product mix and price increases.

Marketing, selling and administrative expenses decreased by 6%, or 1% excluding foreign exchange impact, to $1.1 billion in the first quarter of 2009 compared to the same period in 2008.

Advertising and product promotion spending increased by 2%, or 6% excluding foreign exchange impact, to $324 million in the first quarter of 2009, compared to the same period in 2008.

Research and development expenses increased by 18%, or 21% excluding foreign exchange impact, to $923 million in the first quarter of 2009 compared to the same period in 2008. The increase is primarily due to upfront payments related to the ZymoGenetics and Nissan Chemical Industries collaborations announced in the first quarter.

The effective tax rate on earnings from continuing operations before income taxes was 33.5% for the first quarter of 2009 and included additional taxes related to the transfer of various international units of the company to Mead Johnson prior to its IPO.

The company reported first quarter non-GAAP net earnings from continuing operations attributable to shareholders of $958 million or $0.48 per diluted share, compared to $788 million or $0.39 per diluted share for the same period in 2008. An overview of specified items is discussed under “Use of Non-GAAP Financial Information.”