Effects of Accounting Scandal 2002 on Bristol Myer Company

Topics: Bristol-Myers Squibb, Clinical trial, Cancer Pages: 270 (84801 words) Published: February 26, 2011
Their will. Our medicines.
Together we can prevail.

2006 Annual Report


Bristol-Myers Squibb’s
health care products. integrity of its maker.

Our company’s mission is to extend and enhance human life by providing the highest-quality pharmaceutical and related

We pledge—to our patients and customers, to our employees and partners, to our shareholders and neighbors, and to the world we serve—to act on our belief that the priceless ingredient of every product is the honor and

At Bristol-Myers Squibb, we develop medicines and related health care products to help people live full and active lives. A few of our patients and customers are pictured on the cover.These and other patients are profiled in our Special Report, beginning on page 7.

To Our Stockholders
2006 was a challenging transitional year for Bristol-Myers Squibb. We experienced the significant negative impact of generic competition in our pharmaceutical business, and made the difficult decision to change leadership of the company. We also achieved preliminary settlement of an investigation of drug pricing, sales and marketing practices that began many years ago. At the same time, we were successful in launching several promising new products, expanding key businesses and advancing our robust pipeline—all in areas of serious unmet medical need. As a result, Bristol-Myers Squibb is now well positioned to begin growing sales and earnings, and to build shareholder value. FINANCIAL PERFORMANCE

In 2006, the company’s net earnings from continuing operations on a GAAP (Generally Accepted Accounting Principles) basis were $1.6 billion, or $0.81 per diluted share, from net sales from continuing operations of $17.9 billion. This compares to earnings of $3.0 billion, or $1.52 per diluted share, on sales of $19.2 billion in 2005. On a non-GAAP basis, excluding specified items, net earnings from continuing operations in 2006 were $2.1 billion, or $1.09 per diluted share, compared to $2.8 billion, or $1.43 per diluted share, in 2005. Sales and earnings were adversely affected by several developments in the year. First, as expected, we lost exclusivity on Pravachol, our cholesterol-lowering medicine, in the U.S. and in several European countries. For many years, Pravachol was one of our leading products. More recently, we experienced the negative impact of generic competition with our topselling product Plavix (clopidogrel bisulfate), an antiplatelet medicine that Bristol-Myers Squibb and sanofi-aventis (Sanofi) are codeveloping and co-commercializing around the world. In August 2006, the Canadian pharmaceutical company Apotex launched its generic version of Plavix in the U.S., flooding the market for several weeks until sales were halted by a court order.This action by Apotex reduced our Plavix sales in the range of $1.2 billion to $1.4 billion in 2006, and was reflected in an overall 15 percent decline in Plavix sales for the year. We expect the generic supply in the market will have a residual impact on 2007 Plavix sales.

2006 Annual Report

Bristol-Myers Squibb


Several years ago, Apotex filed a request with the U.S. Food and Drug Administration (FDA) to sell its generic clopidogrel product in the U.S., despite the existence of patents on Plavix held by Sanofi and Bristol-Myers Squibb in the U.S. and other countries. Believing our patents to be valid and infringed, we sued Apotex to protect our valuable intellectual property rights. Bristol-Myers Squibb and Sanofi had invested extensively in Plavix over more than a decade to conduct clinical research demonstrating its benefits to patients. Because of the way U.S. law in this area is structured, Apotex was able to apply for and receive permission to market its generic clopidogrel in the U.S., even though the dispute over the validity of the Plavix patent had not yet been settled. In early 2006, the FDA approved Apotex’s request, enabling that...
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