Bristol-Myers Reports 2008 Results

“In the quarter, and in the past year, we’ve taken decisive action as a BioPharma leader to become leaner and more agile,” said James M. Cornelius, chairman and chief executive officer. “I’m particularly pleased by our global commercial teams in presenting our value proposition to customers and payers. We’ve executed with speed and rigor against our strategy. Results this quarter continued to be strong, capping off an outstanding year.

“We are reaching our objectives in all areas. Our favorable cash position expedites our business development efforts. Our ‘String of Pearls’ grows more valuable with each asset and alliance we add. And we’re becoming more productive, as seen in our growing profit margins.

“In 2009, we expect to deliver on our promises to advance our innovative pipeline, execute our business development plans, grow margins and meet our productivity goals. We are well on-track to fulfill our commitments to patients and shareholders, and to navigate the challenges of coming years.”

Fourth Quarter Results

Bristol-Myers Squibb posted fourth quarter 2008 net sales from continuing operations of $5.2 billion, an increase of 4%, or 8% excluding foreign exchange impact, compared to the same period in 2007. Pharmaceutical net sales totaled $4.5 billion and sales from Mead Johnson Nutrition company totaled $707 million in the fourth quarter of 2008, representing increases of 4% and 6%, respectively, compared to 2007.

US pharmaceutical net sales increased 13% to $2.8 billion in the fourth quarter of 2008 compared to the same period in 2007. International pharmaceutical net sales decreased 9% to $1.7 billion. This decrease was due primarily to an 8% unfavorable foreign exchange impact and the divestiture and erosion of some mature brands in Latin America, Middle East and Japan.

Gross profit as a percentage of net sales improved to 71.0% in the fourth quarter 2008 compared to 66.1% in 2007. This improvement was mostly driven by higher manufacturing rationalization charges in 2007, cost improvements, favorable product mix and price increases.

Marketing, selling and administrative expenses increased by 2%, or 7% excluding foreign exchange impact, to $1.3 billion in the fourth quarter of 2008 compared to the same period in 2007.

Advertising and product promotion spending decreased by 3%, or was flat excluding foreign exchange impact, to $449 million in the fourth quarter of 2008, compared to the same period in 2007.

Research and development expenses increased by 29%, or 31% excluding foreign exchange impact, to $1.1 billion in the fourth quarter of 2008 compared to the same period in 2007. The increase was due to upfront and milestone payments to Exelixis in 2008 as part of an expansion of the collaboration between the companies.

The effective tax rate on earnings from continuing operations before minority interest and income taxes was 22.5% for the fourth quarter of 2008, and includes the full-year impact of the research and development tax credit.

The company reported fourth quarter net earnings from continuing operations of $1.2 billion or $0.61 per diluted share, compared to net loss of $192 million or $0.10 per diluted share for the same period in 2007. The fourth quarter 2008 net earnings include a $582 million after tax gain, or $0.29 per diluted share, mainly attributed to the proceeds from the sale of our stake in ImClone Systems. An overview of the specified items is discussed under “Use of Non-GAAP Financial Information.”

Product And Pipeline Update

Bristol-Myers Squibb’s top-line growth in the fourth quarter was led by key drivers including steady growth for PLAVIX in the US and strong sales increases for ABILIFY across all indications and regions. ORENCIA and SPRYCEL sales continued to grow, fueled by additional indications and country approvals. The company’s virology portfolio, led by the SUSTIVA franchise for HIV and BARACLUDE for hepatitis B also demonstrated consistent growth worldwide.

In December, the company and its marketing partner, sanofi-aventis, announced that the US Court of Appeals for the Federal Circuit upheld the June 19, 2007 decision by the US District Court for the Southern District of New York holding the US patent 4,847,265 covering clopidogrel bisulphate, the active ingredient in PLAVIX, valid and enforceable. As a result of this ruling, the ‘265 patent protection for this product is maintained in the United States until November 2011, subject to any further legal proceedings.

In the fourth quarter, the company submitted a supplemental biologics licensing application (sBLA) which was accepted for filing by the FDA for the use of ORENCIA for patients with early rheumatoid arthritis.

The company announced new data in November from two separate cohort evaluations, which suggest that long-term treatment with BARACLUDE may reduce liver damage caused by chronic hepatitis B. Long-term treatment with BARACLUDE was associated with improved liver histology, including improvement in fibrosis, in chronic hepatitis B patients.

On October 1, the FDA approved the use of REYATAZ 300 milligram once-daily boosted with ritonavir 100 milligram as part of combination therapy in previously untreated (treatment-naïve) HIV-1 infected patients.

In November, the Committee for Medicinal Products for Human Use (CHMP) in Europe issued a negative opinion on the marketing authorization application for IXEMPRA (ixabepilone) in the treatment of patients with metastatic breast cancer. Bristol-Myers Squibb submitted a request for re-examination of the opinion and will continue to work closely with the agency.

In January 2009, the company announced the approval of SPRYCEL in Japan.

Selected Balance Sheet And Cash Update

Bristol-Myers Squibb continues to make significant progress in strengthening its balance sheet and cash position. The company launched a new working capital initiative during the quarter with the goal of improving cash flows by approximately $1 billion by 2010. This will help provide greater flexibility for future strategic investments.

The company’s cash and cash equivalents were $8.0 billion as of December 31, 2008 of which a significant majority was invested in US Treasury Bills and Treasury-backed securities. The company’s net cash position improved to $1.5 billion from $1.2 billion as of September 30. The company received $1.0 billion in the fourth quarter from the sale of its shares of ImClone Systems and also received proceeds from the sale of a non-core business.

2009 Guidance

Bristol-Myers Squibb has provided 2009 GAAP EPS guidance of $1.58 to $1.73 and non-GAAP EPS guidance of $1.85 to $2.00. Key non-GAAP guidance assumptions include low single-digit revenue growth (mid-to-high single digit growth excluding foreign exchange); slight improvement in gross margins; advertising and promotion increase in the low-to-mid single-digit range; marketing, sales and administrative expense decrease in the low-to-mid single digits; research and development expense growth in the mid single-digit range; and an effective tax rate of approximately 24%.