27 Oct 2008

Bristol preps for biotech buying spree

Bristol-Myers Squibb yesterday said it plans to buy "a long list" of biotech drugs and companies.

The company's future buying spree was announced after the New York City-based drugmaker hit what amounts to a jackpot these days: third-quarter net income tripled on strong sales of Plavix and a $2 billion gain from the sale earlier this year of its ConvaTec unit.

Earnings -- powered by strong sales of its heart, HIV/AIDS and psychiatric drugs and revenue from the sale earlier this year of ConvaTec, its wound care business -- beat Wall Street expectations by 4-cents, according to Bloomberg.

The company outbid this month for ImClone Systems said it was flush with $7.2 billion in cash for possible acquisitions over the next two years, before its top-selling product, the blood-thinner Plavix, loses patent protection.

"It is a buyers' market, but most of our competitors are also looking at some of these same companies," Bristol-Myers CEO James Cornelius said in a conference call with analysts.

"We have a long list of companies that we would like to acquire over the next couple of years, and I'm confident we will do it."

Net income for the quarter rose to $2.58 billion, or $1.29 a share, from $858 million, or 43 cents, a year earlier.

Deutsche Bank analyst Barbara Ryan and J.P. Morgan analyst Chris Schott wrote in client notes they expect Bristol-Myers to post double-digit earnings-per-share growth next year. And they said there's a bonus: the company is relatively free of new generic competition, a factor that has cut deeply into the earnings of other major drugmakers.

Bristol-Myers third quarter results included the of loss $224 million on investments in mortgage-backed securities, which brings to $250 million the drug marker lost on the type of investments roiling the global financial system.

Revenue in the third quarter rose 14 percent, to $5.25 billion on strong sales of Plavix and the schizophrenia drug Abilify.

The drugmaker raised its 2008 forecast to a range of $1.61 to $1.66 a share, from $1.36 to $1.46, based on plans to sell its 13 percent stake in ImClone, valued at $900 million.

Last month, Bristol-Myers' bid was turned down by ImClone, which co-markets the cancer drug Erbitux with Bristol-Myers in the United States and Canada.

The bidding was won by Eli-Lilly, which plans to complete the purchase of the biotech early next year.

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