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July 27, 2007
Bristol-Myers Squibb, one of the top five employers in the Mercer County region, issued an omi nous warning yesterday of work- force reductions later this year, despite reporting a generally upbeat second quarter.
The New York-based pharmaceutical company, which in the past year weathered several storms -- most notably battling generic competition of its blood thinner Plavix and the dismissal of its CEO Peter Dolan -- would not specify when or where the cutbacks would occur or how many people may lose their jobs before an investors meeting scheduled for Dec. 5.
Bristol-Myers employs 4,200 in several locations throughout Mercer County, compared with 4,129 in September. As of last fall, the pharmaceutical giant also employed more than 1,500 in nearby Plainsboro, Middlesex County, but company spokesman Tony Plohoros could not provide current Plainsboro figures yesterday. In January, Bristol-Myers reported it had 5,062 workers at various Mercer County sites, making it the county's third largest employer behind Merrill Lynch and Princeton University.
In reporting financial results yesterday for the quarter that ended June 30, Bristol-Myers showed 5.8 percent growth in net earnings, to $706 million, or 36 cents per share, compared with $667 million, or 34 cents per share, for the same quarter in 2006. But in a prepared release accompanying those figures, Chief Executive James Cornelius talked of stream lining the company.
"This transformation will include a comprehensive cost-reduction program, incremental to cur rent efforts that will include work- force reductions in some areas and the rationalization of some facilities," Cornelius stated.
Plohoros said Bristol-Myers could not provide more specifics now. "We expect that reductions will begin before the end of the year," he said. "We are still in the evaluation and planning process, and we expect to provide an up date at our Dec. 5 investors meet ing."
While he couldn't pinpoint which locations will be affected, Plohoros did say, "It's a global initiative. It will include a thorough examination of all aspects of our business."
He said research and development and sales will remain priorities for the company, while it will look to back-office functions as possible areas to cut back.
In Mercer County, Bristol-Myers as of September had 496 working in corporate offices in West Windsor, 14 involved in clinical pharmacology work in Hamilton, 1,421 in research and development in Pennington, and 2,198 in corporate offices and research in Princeton. The 1,500 people at the Plainsboro location were in sales and marketing.
Bristol-Myers had made a deal to pay Canadian drugmaker Apo tex $40million to keep a generic rival to Plavix off the market until the patent expires in 2011. The deal came apart as the Justice Department began an investigation. Bristol-Myers fired CEO Peter Dolan and general counsel Richard Willard in September over the contro versy, and entered into a deferred- prosecution agreement with the U.S. Attorney's office.
Bristol-Myers yesterday forecast improved earnings per share for the year of $1.35 to $1.45, as compared with earlier forecasts of per- share earnings of $1.24 to $1.34. Shares closed yesterday down 5.51 percent from the day before.
In his prepared statements accompanying the quarterly figures, Cornelius said that "we believe that our specialty pharmaceuticals focus, our growing investment in biologics and commitment to reducing our cost base will drive sales and earnings growth in the years ahead."
Joseph Tooley, an analyst with A.G. Edwards who follows Bristol- Myers, said the company's showing was "roughly in line with the consensus." He said they reduced research and development expenses by sharing some costs with partners.
"The quarter was okay," he said. "We're looking at decent earnings growth over the next couple of years. In that regard, they are in pretty good shape."
Although there had been speculation following the Plavix contro versy that Bristol-Myers would be a takeover candidate, recent actions suggest otherwise, according to Tooley. For example, he said they have licensed-out some compounds, thus possibly reducing the overall value of the Bristol-Myers' pipeline to a potential acquirer.
"They are indicating that they are operating on a go-it-alone basis," he said. "I think they are fairly well-positioned. They look okay through 2011. You have Plavix out there and that expiration looms, but they are pursuing a pediatric extension that would take it out to 2012."
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