We welcome you to JobBank USA and hope your job hunting experience
is a pleasant one. We hope you find our resources useful.
December 6, 2007
Faced with the prospect of losing the patent on its biggest money-making drug, Bristol-Myers Squibb unveiled a dramatic plan yesterday to reinvent itself by sharply cutting its worldwide work force and shuttering or selling more than half of its manufacturing plants.
The company outlined for investors a strategy for surviving the loss of patent protections on its blood-thinner Plavix, scheduled to occur in 2011, that involves fewer products, a reduced work force, aggressive outsourcing, and a focus on research and development, particularly into medications for serious diseases such as diabetes or Alzheimer's.
The three-year downsizing plan calls for eliminating 10 percent of the company's 44,000 jobs worldwide as well as not filling vacancies and shedding more than half of its 27 factories. Company spokespeople said the cuts have already begun.
The impact on Bristol-Myers' operations in Mercer County was not immediately clear. The pharmaceutical giant employs more than 7,000 people in central New Jersey, including 4,000 in Mercer County facilities in Lawrence, West Windsor and Hopewell Township. It is among Mercer County's largest employers. Another 1,500 are employed in Plainsboro.
"We have not really provided any clarity yet," spokesman Jeff MacDonald said, "in part due to the fact that these are in the process of occurring between now and 2010. We have notified employees in a number of places in New Jersey and elsewhere they have been eliminated."
He did say that none of Bristol-Myers' facilities in Mercer or Middlesex counties would be shut down. The company said it is considering selling off ConvaTec, which is based in Montgomery and as of late last year employed approximately 300 people.
New York City likely will be hit harder by the cuts.
After its reduction, the drug maker, which has been based in Manhattan since the 1940s, is expected to maintain a mere toehold in the city.
The company is expected to vacate all but one floor of its headquarters at 345 Park Ave., where it occupied 550,000 square feet as recently as 10 years ago.
CEO James Cornelius acknowledged in a conference call with investors that the job cuts are "significant" but said they are an important step toward turning Bristol-Myers into a next-generation biopharma company that combines the deep pockets and resources of a large pharmaceutical company with the entrepreneurial spirit of a smaller biotech.
"If we can't succeed in that dimension we probably will not succeed in our total strategy over the next three years," he said.
"We will leave no stone unturned," Cornelius told investors. "We looked at every aspect of the business in great detail. You told us our margins were not what they should be."
The company has some hard numbers to confront.
Cornelius talked of the cliff Bristol-Myers is approaching when its patent on Plavix expires in 2011.
"I don't have an answer on how to offset or mitigate that cliff," he said. "Part of this strategic review is targeted long term on mitigating the size of the cliff."
Plavix is such an important drug to Bristol-Myers that during the regime of a former CEO, the company paid rival drug company Apotex $40 million to keep a generic version of Plavix off the market until 2011. That deal unraveled in the wake of a Justice Department investigation, and two years of federal oversight of the company ended in June.
Bristol-Myers had net sales in the third quarter of $5.1 billion. Of that, Plavix accounted for sales of $1.25 billion compared to $630 million in the same quarter a year ago. Through downsizing, Bristol-Myers expects to save $1.5 billion by 2010, including $400 million by trimming manufacturing. The company expects to incur expenses of $900 million to $1.1 billion as it reduces personnel and operations. It expects to incur $300 million in expenses in 2007 as part of that.
The cutbacks of about 4,300 employees began this year and the majority will occur over the next two years.
John Celentano, president of Bristol-Myers' Health Care Group, said that about 1,300 employees already have been informed their positions are being eliminated. The rest will be informed by next year. He and other officials said that the total downsizing is 15 percent when considering things such as vacant positions that have gone unfilled.
"It is difficult," he told investors. "These are tough decisions, but they will help to assure we can continue to invest in our future."
That future, according to company officials, will include shrinking from 154 products to 62 while at the same time refocusing their commitment to research and development, in particular for diseases where there is an unmet medical need.
Bristol-Myers adjusted its 2007 earnings forecast to a range of $1.15 to $1.20 per share, down from a range of $1.28 to $1.33 per share, due in part to the restructuring expenses. However, it increased its outlook for 2008 earnings per share from a range of $1.60 to $1.70 to a range of $1.65 to $1.75. The company predicted growth of at least 15 percent a year through 2010.
The company also announced it was increasing its quarterly dividend for the first time since 2002, to 31 cents a share from the current 28 cents.
Bristol-Myers' stock rose to $29.26 by the close of trading, an increase of 20 cents from the day before.
However, financial analysts were not optimistic.
In a note to clients, Banc of America securities analyst Chris Schott expressed concern over upcoming patent expirations. "We do not believe that the potential near-term upside from expanded cost reductions will be able to offset the next wave of patent expirations in key Bristol franchises," Schott said, pointing to both Plavix and Abilify, an anti-psychotic drug.
Sales of Abilify rose 34 percent in the third quarter to $420 million. The key patent for Abilify will expire in 2014.
Another analyst, Fitch Ratings, said yesterday that in general the pharmaceutical industry will experience continued pressure from generics as well as regulatory scrutiny in 2008. The outlook for the sector as a whole remains stable, the agency said.
In addition to the cutbacks it announced, Bristol-Myers also is selling its Massachusetts-based Medical Imaging business, and is considering options for two more of its brands, ConvaTec, which deals in wound-care products, and Mead Johnson Nutritionals.
The Associated Press and The New York Times contributed to this story.
Email This Page!