(Correction: The original article incorrectly said that the company raised the high end of its full year GAAP earnings guidance. A corrected version follows.)
Thursday, biopharmaceutical company Bristol-Myers Squibb Co. (BMY) reported a 28.7% rise in profit for the second quarter, benefiting mainly from double-digit sales growth of both its blood-thinning drug Plavix and antipsychotic drug Abilify. Further, the company, which is in a $2.4 billion acquisition deal with biotechnology firm Medarex, Inc. (MEDX), also raised its full year adjusted earnings outlook to a range above Wall Street estimates.
New York-based Bristol-Myers' second-quarter net earnings grew to $1.30 billion from last year's net earnings of $1.01 billion. Net earnings attributable to the company was $983 million or $0.49 per share, compared to $764 million or $0.38 per share in the same quarter of last year.
Excluding prior year's discontinued operations, the company's earnings, on a continuing operations basis, climbed to $1.30 billion from last year's $963 million, and net earnings attributable to Bristol-Myers Squibb grew 36% to $983 million or $0.49 per share from $722 million or $0.36 per share in the previous year.
Excluding certain specified one-time items, non-GAAP net earnings from continuing operations attributable to Bristol-Myers rose 30% to $1.109 billion or $0.56 per share from $861 million or $0.43 per share a year ago.
On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.
Second-quarter net sales rose 3% to $5.38 billion from $5.20 billion in the prior-year quarter, beating eleven Wall Street analysts' consensus estimate of $5.30 billion. Excluding foreign exchange impact, the net sales growth was 8% in the quarter.
Gross profit improved to 72.9% of net sales from 67.9% in 2008, mostly driven by higher manufacturing rationalization charges in the previous year, favorable foreign exchange impact, cost improvements, favorable product mix and price increases.
On a segmental basis, BioPharmaceuticals net sales grew 4% year-over-year to $4.67 billion, while the growth was 9% excluding foreign exchange impact. U.S. BioPharmaceuticals net sales increased 13% to $3.0 billion, while international BioPharmaceuticals net sales decreased 9% to $1.7 billion, but rose 4% excluding foreign exchange impact.
Mead Johnson's net sales in the second quarter edged down 1% to $719 million, while sales rose 5% excluding foreign exchange impact. Bristol-Myers Squibb's share of Mead Johnson's earnings decreased 20% to $151 million, primarily due to the impact of items attributed to its initial public offering, including the 17% reduction in ownership. In February, the company sold about 17% of its infant-formula business Mead Johnson Nutrition in an IPO, raising nearly $800 million.
Product-wise, in the Cardiovascular section, sales of Plavix rose 11% year-over-year to $1.54 billion, and the growth was 15% in the U.S. Meanwhile, Avapro/Avalide sales dropped 7% to $313 million, with a 3% drop in U.S. Sales.
Bristol-Myers' virology portfolio continues to demonstrate worldwide sales growth, with 32% rise in sales of Baraclude for hepatitis B, 11% rise in Sustiva franchise sales and 2% increase in Reyataz for HIV. In Oncology, Erbitux sales dropped 12%, while sales of Sprycel climbed 41% and sales of Ixempra grew 12%. In the Neuroscience portfolio, sales of Abilify rose 22%, and in Immunoscience, sales of Orencia climbed 40% in the quarter.
In the preceding first quarter, Bristol-Myers had reported higher net earnings of $921 million, while net earnings attributable to shareholders dropped 3.5% to $638 million due to higher taxes and litigation expenses. On a per-share basis, net earnings from continuing operations attributable to shareholders were $0.32. Non-GAAP net earnings from continuing operations attributable to shareholders was $958 million or $0.48 per share, and net sales were $5.01 billion.
Among peers, drug major Pfizer Inc. (PFE) on Wednesday reported a 19% fall in profit for the second quarter to $2.26 billion or $0.34 per share, negatively impacted by strengthening of the U.S. dollar and costs incurred in connection with the pending Wyeth (WYE) acquisition. On an adjusted basis, quarterly earnings dropped 12% to $3.25 billion or $0.48 per share. Revenues declined 9% to $10.98 billion.
Healthcare giant Merck & Co. Inc. (MRK) Tuesday reported a 12% decline in second-quarter profit to $1.59 billion, hurt mainly by lower revenues as well as merger and restructuring costs. The Dow component's second-quarter GAAP net income attributable to company was $1.56 billion or $0.74 per share, compared with $1.77 billion or $0.82 per share last year. On an adjusted basis, earnings per share was $0.83 per share, lower than $0.86 in the year-ago quarter. Merck's revenues dropped 3% to $5.90 billion, while excluding the impact of foreign exchange, revenue rose 3%.
Swiss drug-maker Novartis AG (NVS) last week reported a 10% drop in profit for the second quarter to $2.04 billion, impacted negatively by lower net sales, currency changes and higher financing costs. Net income attributable to shareholders of Novartis AG dropped to $2.035 billion from the prior year's $2.25 billion, and earnings per share fell 9% to $0.89 from $0.98 in the prior year. In the quarter, total net sales dropped 2% to US$10.55 billion, while net sales grew 8% in local currency.
For the first six months of fiscal 2009, Bristol-Myers' net earnings grew to $2.22 billion from $1.90 billion last year, and net earnings attributable to Bristol-Myers rose to $1.62 billion or $0.81 per share from $1.43 billion or $0.71 per share a year ago. First-half net sales grew 3% to $10.40 billion from $10.09 billion in 2008, and BioPharmaceuticals sales went up 4% to $8.99 billion.
Commenting on the results, James Cornelius, Bristol-Myers' chairman and chief executive officer, stated, "The excellent results for the second quarter and first six months of the year clearly represent how Bristol-Myers Squibb is rapidly transforming into a next-generation BioPharma leader through robust science, superior operational performance and disciplined financial management. We are well on-track to continue delivering on our growth commitments."
The company noted that it extended its collaboration with Otsuka on Abilify and, as a result, expect that its outlook for 2013 is much improved.
Further, Bristol-Myers revised its fiscal 2009 GAAP earnings per share guidance to a range of $1.58 to $1.68 from the prior outlook of $1.58 to $1.73 per share. The company raised its fiscal 2009 non-GAAP earnings guidance to a range of $1.95 to $2.05 per share, from the prior outlook of $1.85 to $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.
The earnings forecast reflects low single-digit revenue growth projection on a reported basis, or high single digit growth excluding foreign exchange. For the year, gross margin is expected to improve approximately 200 basis points.
Analysts expect the company to report earnings of $1.92 per share on revenues of $21.35 billion for fiscal 2009.
Bristol-Myers said its forecast for 2009 and the three-year compound annual growth rate include the impact of the company's acquisition of Medarex, but exclude the impact of any potential future strategic acquisitions and divestitures.
The planned acquisition of Medarex is expected to decrease the company's earnings per share by $0.02 to $0.03 in 2009 and $0.07 to $0.09 in 2010.
It was on Wednesday that Bristol-Myers said it agreed to buy biotechnology firm Medarex, Inc. (MEDX) for an aggregate purchase price of about 2.4 billion. Under the terms of the deal, Bristol-Myers Squibb will begin a cash tender offer on or about July 27 to buy all outstanding shares of Princeton, New Jersey-based Medarex for $16.00 per share in cash. The tender offer is expected to close in about 30 days of its commencement.
The acquisition is projected to position Bristol-Myers Squibb for long-term leadership in biologics, and would give full rights to a promising phase III compound, ipilimumab. The deal would also significantly expand the company's oncology and immunology pipeline and provide access to novel antibody discovery technology.
BMY is currently trading at $20.55, up $0.26 or 1.28%, on a volume of 5 million shares.
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