* Expects Productivity Transformation Initiative to Generate Pre-Tax Cost
Savings and Avoidance of Approximately $1.5 Billion by 2010 and Incur
Associated Pre-Tax Costs of $900 Million to $1.1 Billion - Reducing Total
Headcount by 10%
* Announces 11% Increase in Indicative Dividend for 2008 and Declares
Quarterly Dividend
* Revises 2007 Full-Year GAAP EPS Guidance to $1.15 to $1.20 and Reaffirms
Non-GAAP EPS Guidance of $1.42 to $1.47 at the high end of the range
* Provides 2008 Full-Year GAAP EPS Guidance of $1.44 to $1.54 and Raises
2008 Full-Year Non-GAAP EPS Guidance from $1.60 to $1.70 to $1.65 to $1.75
* Expects Non-GAAP EPS CAGR of at Least 15% from 2007 Base Through 2010,
subject to certain assumptions
NEW YORK, Dec. 5 /PRNewswire-FirstCall/ -- During a meeting with
investors today, Bristol-Myers Squibb Company (NYSE: BMY) will conduct a
comprehensive review of its business and research and development
operations, and outline its strategy to improve shareholder value, increase
profitability and improve top line growth. The overview will provide
investors with insight into how the company intends to implement its
strategy and transform the company through its productivity initiative into
a next-generation BioPharma company that pairs the scale and resources of a
mid-sized pharmaceutical company with the entrepreneurial spirit and
innovative focus of a biotech startup. The plan focuses the company's
commercial and scientific units on growth areas, such as specialty and
biologic medicines, while providing a framework to enhance productivity and
reward entrepreneurship.
Strategic Review
During the meeting, senior management of the company will discuss the
status of the strategic review the company has been conducting over the
past several months and explain how it intends to continue the company's
development into a next-generation BioPharma company. The company's vision
of a BioPharma company is the outgrowth of a process that evaluated the
company's four core businesses in great detail: specialty medicines,
cardiovascular and metabolic drugs, mature pharmaceutical brands and the
Health Care Group, and contains the following elements:
-- an innovative portfolio of new products targeted at serious unmet
medical needs, or significant clinical advancement over existing
therapies;
-- a Selectively Integrated Business Model, which complements internal
capabilities with external innovation, streamlines manufacturing,
creates a targeted approach to geographies and customers, utilizes
strategic partnerships with suppliers and competitors, and focuses on
innovative sales and marketing practices;
-- Strong Continuous Improvement capabilities, simplified processes,
enhanced efficiency and effectiveness and aligned infrastructure to
support growth.
The review reaffirmed several elements of the company's ongoing
strategic focus. The company will continue to invest in key growth
products, including specialty and biologic medicines, and cardiovascular
and metabolic drugs. The company will also continue to scale back assets in
its profitable, though declining, mature brands.
The company is seeking opportunities to maximize the value of its
Health Care Group companies for shareholders. Consistent with this
objective, the company plans to divest its Medical Imaging business.
Further, the company is currently reviewing a range of strategic
alternatives for its ConvaTec and Mead Johnson businesses. "We remain fully
aware of the important contributions these businesses have made to earnings
and cash flow, and we will take these factors into full consideration when
weighing our strategic options," said James M. Cornelius, chief executive
officer, Bristol-Myers Squibb.
As a next-generation BioPharma company, Bristol-Myers Squibb seeks to
reallocate resources to enable additional strategic acquisitions, such as
the recent acquisition of Adnexus Therapeutics, as well as pursue
partnerships and other collaborative arrangements. These alliances should
add to the company's innovative capabilities, portfolio and pipeline to
amplify the company's ongoing focus on growth areas, such as specialty
medicines and biologics.
Productivity Transformation Initiative
In addition to its overview of the company's strategy, senior
management will discuss the scope and details of its Productivity
Transformation Initiative, the company's first step to achieve a culture of
continuous improvement which was begun earlier this year. Over 300
initiatives have been identified that will enhance the company's
efficiency, effectiveness and competitiveness and substantially improve its
cost base.
Key productivity initiatives include reducing general and
administrative operations by simplifying, standardizing and outsourcing,
where appropriate, processes and services, rationalizing the company's
mature brands portfolio, consolidating its global manufacturing network
while eliminating complexity and enhancing profitability, simplifying its
geographic footprint and implementing a more efficient go-to-market model.
Specific productivity goals include:
-- reducing the number of brands in the company's mature products
portfolio by 60 percent between 2007 and 2011;
-- reducing the number of manufacturing facilities by more than 50
percent by the end of 2010; and
-- reducing total headcount by approximately 10 percent between 2007
and 2010.
Some positions have been eliminated in 2007 and the substantial
majority of positions will be eliminated in 2008 and 2009. "It is difficult
to see our valued colleagues leave the company, but right-sizing our
workforce across all areas is critical to achieving our productivity goals
and enhancing the competitive position of the company. While we are
reducing headcount in certain functions, we will continue to invest in R&D,
biologics and commercialization talent," said Mr. Cornelius.
The productivity initiative is expected to generate approximately $1.5
billion in cost reductions and avoidance on a pre-tax basis versus the
company's previous strategic plan for 2010. Costs associated with the
implementation of the Productivity Transformation Initiative are estimated
to be between $0.9 billion to $1.1 billion on a pre-tax basis, with
approximately $300 million expected to be incurred in 2007 and $400 million
to $500 million expected to be incurred in 2008. The ultimate timing of the
recording of the charges cannot be predicted with certainty and will be
affected by the occurrence of triggering events for expense recognition
under U.S. Generally Accepted Accounting Principles (GAAP), among other
factors.
Indicative Dividend Increase for 2008 and Quarterly Dividend
Today, the company announced that the Board of Directors declared an 11
percent dividend increase, the first increase since 2002. The dividend
increase will result in a quarterly dividend of thirty-one cents ($.31) per
share on the company's Common Stock for an indicative dividend for the full
year of 2008 of $1.24 per share, subject to the normal quarterly review by
the Board. The next quarterly dividend on the $.10 par value Common Stock
of the company will be payable on February 1, 2008 to stockholders of
record at the close of business on January 4, 2008.
The Directors also declared a quarterly dividend of fifty cents ($0.50)
per share on the $2.00 Convertible Preferred Stock of the corporation,
payable March 3, 2008 to stockholders of record at the close of business on
February 8, 2008.
Financial Outlook
Based on the strategic and operational assumptions that will be
outlined at the meeting, the company expects non-GAAP earnings per share to
grow at a minimum of 15 percent compounded annual growth rate, from the
2007 base, for the next three years, excluding costs associated with the
Productivity Transformation Initiative and other specified items that have
not yet been identified and quantified. In addition, the guidance assumes
certain other assumptions including that the company and its product
partner, sanofi- aventis, maintain exclusivity for the PLAVIX(R) patent
through at least 2010.
The company revised its 2007 fully diluted earnings per share guidance
on a GAAP basis to $1.15 to $1.20 from $1.28 to $1.33, reflecting the
estimated effect of potential fourth quarter charges of approximately $300
million relating to the company's Productivity Transformation Initiative.
The company also reaffirmed its 2007 fully diluted earnings per share
guidance on a non- GAAP basis to be between $1.42 and $1.47, and indicated
that it expects non- GAAP fully diluted earnings per share to be at the top
end of the range.
The company is providing 2008 fully diluted earnings per share guidance
on a GAAP basis of $1.44 to $1.54. The company also is raising its
estimated 2008 earnings per share guidance on a non-GAAP basis from a range
of $1.60 to $1.70 to a range of $1.65 to $1.75, subject to certain
assumptions. The fully diluted earnings per share guidance for 2008
includes earnings from the Medical Imaging business. A disposal of the
Medical Imaging business would decrease fully diluted earnings per share by
approximately $0.05. Further, this guidance assumes, compared to 2007:
-- high single-digit revenue growth;
-- overall flat gross margin, with improvement in Pharmaceuticals margin;
-- mid single-digit growth in research and development costs;
-- all other operating expenses flat with modest increases in Advertising
and Promotion, offset by a significant reduction in G&A expense; and
-- increase in effective tax rate to approximately 24%.
The GAAP guidance for 2008 includes the impact of restructuring and
other charges related to the Productivity Transformation Initiative
discussed below, but excludes proceeds from potential asset sales that have
not yet been identified or quantified. Both the GAAP and non-GAAP guidance
further assumes no significant acquisitions or divestitures and that the
company and its product partner, sanofi-aventis, maintain exclusivity for
the PLAVIX(R) patent through at least 2010.
Further, the non-GAAP 2008 guidance excludes charges related to the
Productivity Transformation Initiative and other specified items that have
not yet been identified and quantified, such as gains or losses from sale
of businesses and product lines; from sale 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.
Details reconciling the 2007 and 2008 non-GAAP earnings per share
guidance with GAAP amounts including specified items are provided in
supplemental materials available on the company's website.
"With this adjustment to earnings guidance and the dividend increase,
we're sending a clear message of confidence: We expect to be able to
continue to reward our shareholders for their support, well into the
future," said Mr. Cornelius.
Research and Development Update
In addition to discussing progress in transforming the R&D organization
into a next-generation BioPharma model and executing its biologic strategy,
the company also will provide an update on key late and early stage
compounds in its pipeline. The company will continue to focus its efforts
on serious disease - in both specialty areas and high prevalence illnesses
- where there is significant unmet medical need. Senior members of the R&D
organization will outline the strategy of building pipelines within
products by broadening their clinical use through multiple indications.
Specific updates will focus on the company's late-stage programs in
oncology, diabetes, cardiovascular disease and solid organ transplant
rejection, including:
-- developmental diabetes compounds saxagliptin, a DPP4-inhibitor, and
dapagliflozin, a novel SGLT-2 inhibitor, both of which are being
developed in partnership with AstraZeneca PLC; the company reiterated
its plan to submit saxagliptin for filing with the U.S. Food and Drug
Administration (FDA) in 2008;
-- two cancer drugs: the internally developed and recently approved
Ixempra (ixabepilone), a new cytotoxic designed to overcome drug
resistance; and ipilimumab (MDX-010), a potential new immunotherapy
paradigm;
-- an internally discovered biologic investigational compound,
belatacept, a novel co-stimulation blocker under development to
replace cornerstone therapy in solid organ transplantation, which the
company expects to submit to the FDA for filing in the first half of
2009; and
-- an oral factor Xa inhibitor, apixaban, under development in
partnership with Pfizer Inc., with the potential to provide
predictable and reliable anticoagulation with a wider therapeutic
window than current therapies.
The investor meeting is being held Wednesday, December 5 from 1 p.m. to
5 p.m. (EST). Investors and the general public are invited to listen to a
live webcast of the meeting at http://www.bms.com/ir. A replay of the business
update will also be made available at the same company website.
Bristol-Myers Squibb Company is a global biopharmaceutical and related
health care products company whose mission is to extend and enhance human
life.
Use of Non-GAAP Financial Information
This press release contains non-GAAP earnings per share guidance
adjusted to exclude certain costs, expenses, gains and losses and other
specified items. Among the items in GAAP earnings per share guidance but
excluded for purposes of determining adjusted earnings per share guidance
are: costs associated to the company's Productivity Transformation
Initiative; 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;
co promotion 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; and significant tax events. 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 to be not reflective of the company's ongoing 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, divestiture of the
company's medical imaging business, the company's productivity
transformation initiative, 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, variability in data provided by third parties,
changes in, and interpretation of, governmental regulations and legislation
affecting domestic or foreign operations, including tax obligations,
difficulties and delays in product development, manufacturing or sales,
patent positions and the ultimate outcome of any litigation matter,
including whether Apotex will prevail in its appeal of the District court's
decision in the PLAVIX(R) patent litigation. These factors also include the
company's ability to execute successfully its strategic plans, including
its Productivity Transformation Initiative and any significant acquisitions
and divestitures, 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; nor are there guarantees that regulatory approvals
will be sought, or sought within currently expected timeframes, or that
contractual milestones will be achieved. 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.
SOURCE Bristol-Myers Squibb Company
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Related links:
http://www.bms.com
http://www.bms.com/ir
CONTACT:
Media, Jeff Macdonald, Communications,
+1-212-546-4824, or cell, +1-917-371-0940,
jeffrey.macdonald@bms.com, or Investors, John Elicker,
+1-212-546-3775, john.elicker@bms.com, or Suketu Desai,
+1-609-252-5796, suketu.desai@bms.com, all of Bristol-Myers
Squibb Company
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