The sales momentum was strong in 2003 for Bristol-Myers Squibb, but the company is weighed down with looming patent expirations and litigation. Despite beating analysts’ financial forecasts in 2003 and in the first quarter of 2004, these same analysts predict a tough road ahead for the company. The rest of 2004 will be characterized by global patent expirations and margin deterioration. Bristol-Myers Squibb’s performance impresses analysts, but looking ahead, analysts believe that patent expirations of significant drugs will more than offset new product revenue, making the next few years difficult for the company.
Contributing to robust sales growth in 2003 were successful new product launches and 20% to 30% full-year growth in worldwide sales of key brands, including Plavix, Pravachol, Avapro/Avalide, Sustiva, and Paraplatin. The company recently launched two new products: Abilify and Reyataz. Bristol-Myers Squibb reported that both drugs contributed to the strength of 2003 sales.
Although Bristol-Myers Squibb has launched three promising new products in the past year — Reyataz for HIV infection, Abilify for schizophrenia, and Erbitux for colorectal cancer — the company faces significant exposure to generics that threaten up to $1 billion per year in product sales. Analysts believe that the company’s generic exposure during the 2004 to 2008 period is substantial, with significant patents expiring during that period. The patent for Plavix could expire in 2008, and the patent for Pravachol faces expiration in 2006. Analysts question whether the company has enough new drugs to overcome its patent expirations. Pravachol represented about 13.5% of Bristol-Myers Squibb’s total revenue in 2003. Plavix accounted for about 11.8% of the company’s total revenue in 2003...
