Bristol-Myers Squibb Company

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Bristol-Myers Squibb Company

345 Park Avenue
New York, New York, 10154
U.S.A.
(212) 546-4000
Fax: (212) 546-4020

Public Company
Incorporated: 1900 as Bristol-Myers Company
Employees: 52,600
Sales: $11 billion
Stock Exchanges: New York
SICs: 2834 Pharmaceutical Preparations; 2844 Perfumes, Cosmetics

Bristol-Myers Squibb Company is the second largest pharmaceutical company in the world and is also recognized worldwide as a major producer and distributor of such consumer products as toothpaste and drain opener. The merger between Bristol-Myers Company and the Squibb Corporation, two large and successful firms with compatible operations, occurred during the late 1980s, when competitive pressure and the increasing cost of research led many pharmaceutical firms to seek business partners in order to survive.

Bristol-Myers was founded in 1887 by two former fraternity brothers, William McLaren Bristol and John Ripley Myers. They each invested $5,000 in the Clinton Pharmaceutical Company, a failing drug manufacturer based in New York, and their small operation began selling medical preparations by horse and buggy to local doctors and dentists. For the first few years the company struggled due to insufficient capital and the new owners’ lack of understanding of how drugs were made. The firm relocated from Clinton to Syracuse, New York, in 1889 to improve its shipping capability, and then moved again, ten years later, to Brooklyn for easier access to its expanding base of customers in Pennsylvania and New England.

In 1898 the company’s name was changed to Bristol, Myers Company. One year later John Ripley Myers died. To help the company grow, the firm increased its sales force, referred to as “detail men,” and began shifting its attention from physicians to wholesale and retail druggists who were now recognized as primary suppliers of medication.

In 1900 the firm incorporated and modified its name, replacing the comma with a hyphen. The same year, Bristol-Myers Company made its first profit and entered the market for specialty products. Sales of such Bristol-Myers items as Sal Hepatica, a laxative mineral salt, and Ipana toothpaste, the first such product to contain a disinfectant, grew rapidly between 1903 and 1905. Strong demand caused several changes in the company’s operation, including the creation of an export department to handle international orders and the opening of new manufacturing facilities in Hillside, New Jersey.

In 1915 Henry Bristol, William Bristol’s oldest son, became general manager. Henry was joined in 1928 by his brothers, William Jr. and Lee, who handled manufacturing and advertising, respectively. During the recession that followed World War I the company discontinued its line of “ethical,” or prescription, drugs to focus production on its two best-selling specialty products and other toiletries, antiseptics, and cough syrups. Bristol-Myers also moved to its present location in Manhattan at this time. The shift in product focus was accompanied by a new emphasis on advertising directed toward consumers rather than doctors and dentists. Bristol-Myers sponsored a radio show featuring a group called the Ipana Troubadours, and introduced the slogan “Ipana for the Smile of Beauty; Sal Hepatica for the Smile of Health.”

The company became a part of Drug, Inc., a large, newly formed holding company, in 1928. Drug, Inc., produced proprietary drugs and other medications and also operated a large retail chain. Bristol-Myers continued to grow and advertised heavily during the Great Depression, launching several new and successful consumer products. Other operations affiliated with Drug, Inc., did not fare nearly as well, however, and the holding company disbanded in 1933.

Upon the outbreak of World War II, Bristol-Myers again became a manufacturer of ethical Pharmaceuticals. It mass produced penicillin for the Allied armed forces through its Bristol Laboratories subsidiary, which had been previously acquired under the name of Cheplin Laboratories. Bristol Laboratories’ experience in the process of fermentation—which was required to make its primary product, acidophilus milk—was easily converted to the manufacture of the antibiotics. This led to the firm’s formal re-entry into the ethical drug area and enabled it to take advantage of the growing demand for antibiotics after the war.

The company continued to grow over the next decade, assisted by television advertisements. In 1957 Henry Bristol became chair of the board and was succeeded as president and chief executive officer by Fredric N. Schwartz, the former head of Bristol Laboratories. Assisted by Gavin K. MacBain, the company’s treasurer who later assumed the position of chairperson, Schwartz acquired several smaller, well-managed companies in growing industries. The new subsidiaries grew quickly with help from Bristol-Myers’s research and marketing expertise. These acquisitions included Clairol, a maker of hair coloring products, purchased in 1959; Drackett, a household products manufacturer, acquired in 1965; and Mead Johnson, which produced infant formula and children’s vitamins, purchased in 1967. Clairol had already made marketing history as a result of the popular advertising campaign “Does she or doesn’t she? Hair color so natural only her hairdresser knows for sure!”

Richard Gelb, the son of Clairol’s founder, reluctantly joined Bristol-Myers after the acquisition to head the Clairol operation. Gelb was given a wide berth in managing Clairol and did so well that he was promoted to executive vice-president and then to president under chairman Gavin MacBain. Gelb became president just as Bristol-Myers’s growth flattened out. A string of new-product failures during the late 1960s drained finances and depressed stock value. In 1972 Gelb was appointed chair and CEO. He initiated a comeback over the next decade by spending $400 million advertising the company’s most popular brands and by expanding its line of health care products. This growth was accomplished in part through the acquisitions of Zimmer Manufacturing Company, a producer of orthopedic and surgical products, in 1972, and of Unitek Corporation, a dental equipment supplier, in 1978.

Under Gelb’s leadership, Bristol-Myers was able to shift gears quickly in response to market changes. When concern over the use of fluorocarbons threatened the spray deodorant market in the mid-1970s, the company increased advertising of its Ban roll-on deodorant. This strategy vaulted Ban into the top-selling spot and increased the sales of all other roll-on products by 75 percent in one year.

Soon thereafter, however, the company suffered a major marketing setback with its Clairol products. In 1977 the National Cancer Institute reported a link between an ingredient used in hair colorants, 2-4 DA A, and cancer in laboratory animals. Bristol-Myers disputed these findings at first but later introduced a new line of hair coloring products and reformulated the original line without the ingredient in question.

Bristol-Myers’s continued attention to health-care research was also a major factor in its resurgence. Beginning in the late 1970s Bristol-Myers began to use cash generated by its consumer-products business to fund the research and development of additional drugs beyond its antibiotics and synthetic penicillins. Several new areas were explored, including cardiovascular agents and anticancer drugs.

At the time, Bristol-Myers was the only pharmaceutical company to invest in anticancer drugs, because growth potential appeared small. The company obtained the marketing rights to several anticancer drugs developed by the National Institutes of Health and other research institutions, universities, and drug companies, and was well positioned when this market took off. Between 1974 and 1980 Bristol-Myers launched 11 new drugs for treatment of cancer and other diseases. Although none of these products was a breakthrough drug, combined they contributed over $200 million in sales to the company by 1980. This growth occurred despite the company’s relatively small research budget.

The company was already an experienced marketer of over-the-counter (OTC) analgesics. Its Excedrin and Bufferin brands had accounted for one-quarter of the total market for non-prescription pain relievers until the early 1960s, when an OTC version of Johnson & Johnson’s Tylenol—a nonaspirin product—took a significant percentage of Bristol-Myers’s market share. In the mid-1970s Bristol-Myers challenged Johnson & Johnson with Datril, a nonaspirin product priced lower than Tylenol. Johnson & Johnson responded quickly, lowering the price of Tylenol.

In 1981 the company settled a series of ten-year-old antitrust suits alleging that Bristol-Myers and Beecham Group, a British pharmaceutical company, had improperly obtained a patent on the antibiotic ampicillin. The suits also accused the firms of engaging in restrictive licensing practices, which had resulted in excessive charges to hospitals, wholesalers, and retailers.

The following year a series of product tampering incidents occurred involving various over-the-counter analgesic products, including Bristol-Myers’s Excedrin capsules. The company responded to new Food and Drug Administration (FDA) regulations in 1983 with tamper resistant packaging for its capsule products.

In 1984 Bristol-Myers signed an agreement with Upjohn which enabled it to introduce Nuprin, a new nonprescription form of ibuprofen pain reliever. The agreement gave Bristol-Myers the means to take on Tylenol once again. It also pitted the firm against American Home Products, which already sold a pain reliever under the Anacin brand and was planning to launch a new ibuprofen-based product called Advil.

At this time, Bristol-Myers entered the market for drugs used to treat anxiety and depression. The company licensed the rights to products manufactured by foreign firms while continuing to invest heavily in its own pharmaceutical research and development. The firm had reorganized its internal research operations and, in 1984, built a multimillion dollar research facility in Wallingford, Connecticut. Two years later Bristol-Myers received FDA approval to market its own tranquilizer product, BuSpar, which did not produce many of the negative side effects of other antidepressant drugs already on the market.

In 1986 the firm became enmeshed in the complex acquisition of Genetic Systems Corporation (GSC), a Seattle-based biotechnology company. GSC was founded in 1980 by a group of entrepreneurial microbiologists who teamed up with Syntex Corporation, a drug company, to manufacture and market tests for sexually transmitted diseases. Three years later the partners formed another venture, Oncogen, to manufacture products for cancer treatment, and in 1985 they offered Bristol-Myers an opportunity to invest in the operation. Later that year, after a Bristol-Myers competitor, Eli Lilly & Company, acquired Hybridtech, a leading producer of monoclonal antibodies, Bristol-Myers negotiated an agreement with GSC management to buy GSC and Oncogen, unaware that GSC had negotiated a similar deal with Syntex two months before. After threatening a lawsuit, Syntex elected to withdraw its offer for GSC in exchange for a $15 million compensation package provided by Bristol-Myers and for marketing rights to selected GSC and Oncogen products. Bristol-Myers sold GSC to Sanofi, a French pharmaceutical firm, in 1990.

In June 1986 a second incident of tampering with capsule-type pain relief products caused two deaths in the Seattle area. This incident led Bristol-Myers to recall its Excedrin capsules nationwide. It soon withdrew all of its nonprescription capsule products from the market, including Comtrex cold relief medication. The capsules were replaced with the caplet, a specially coated, capsule-shaped pill. With this action, Bristol-Myers became the second company in its industry, after Johnson & Johnson, to end the sale of OTC medication in capsule form.

In an attempt to establish a stronger position in the field of coronary care, Bristol-Myers negotiated an agreement in March 1987 to acquire SciMed Life Systems, a manufacturer of coronary balloon angioplasty catheters and other disposable products for treating cardiovascular disease. Two months later Bristol-Myers withdrew its offer after SciMed was sued by Eli Lilly & Company for patent infringement.

Bristol-Myers continued to grow as a manufacturer of prescription Pharmaceuticals, lessening its dependence on consumer products by focusing on acquired immune deficiency syndrome (AIDS) research. Since both cancer and AIDS research are virology-based, this area was a natural fit for the company. In 1987 Bristol-Myers obtained an exclusive license to produce and test two new AIDS drugs, dideoxyadenosine (DDA) and dideoxyinosine (DDI). It also received FDA approval to test an experimental AIDS vaccine on humans.

In November 1989 Bristol-Myers merged with Squibb Corporation. Squibb had been established in 1858 and was among the oldest U.S. pharmaceutical companies. Over half of Squibb’s sales were generated by Pharmaceuticals, and the company also owned a profitable cosmetic business. The two firms had similar corporate cultures. The merger also brought together two chief executives, Gelb and Richard M. Furlaud of Squibb, who had been friends for 25 years and had discussed the idea of a merger occasionally over the previous three years.

As part of the merger agreement Richard Gelb became chairman and chief executive officer of the combined company, while Furlaud, his counterpart at Squibb, became president and headed up the company’s pharmaceutical business. Squibb benefited from Bristol-Myers’s biomedical research capabilities and established presence in consumer health products. This market was becoming increasingly important to Squibb, since several competitors were already negotiating agreements to market their prescription drugs in OTC forms to consumers. In Squibb, Bristol-Myers obtained a new source of prescription drugs with strong sales potential, particularly in the cardiovascular area, and a sizable budget to add to its own continuing research operation.

The merger, which united the twelfth and fourteenth largest companies, was not without tension. By December 1990, 2,000 employees—four percent of the total workforce—had been laid off, and Bristol planned to close 60 pharmaceutical plants worldwide. Closings of six of 18 consumer products plants were scheduled through 1993. Nevertheless, the merger gave Bristol an important worldwide presence, thanks to Squibb’s strong position in Europe, the world’s largest drug market.

Bristol-Myers Squibb Company is comprised of four major product areas with significant global growth potential: pharma-ceuticals, consumer products, medical devices, and nutritionals. The company’s pharmaceutical products include cardiovascular and anticancer drugs, anti-infective agents, drugs for treating the central nervous system, diagnostic imaging agents, and dermatological products which are marketed through the company’s Westwood Pharmaceuticals subsidiary. As the population ages and health care costs continue to increase, Bristol-Myers Squibb’s goal is to develop new pharmaceutical products that will reduce hospitalization and keep health care expenses down.

The company markets over 140 consumer brands, including nonprescription medicines, vitamins, skin care preparations, toiletries, beauty aids, and household items. Its medical devices division serves the orthopedics market with such products as artificial hip and knee replacements, and also supplies various items needed for ostomy procedures, wound and burn care, and other surgical specialties.

The second-largest maker of infant formula in the world, Bristol-Myers Squibb Company also manufactures products for people of all ages requiring nutritional support. In 1989 the company negotiated an agreement with Gerber Products Company to manufacture and market Gerber Baby Formula directly to U.S. consumers. Controversial advertising for this product touched off a boycott of the company’s line of formula products by a group of pediatricians who felt that Bristol-Myers Squibb was attempting to discourage breastfeeding and to compromise physicians’ influence in baby formula selection.

As it entered the 1990s, Bristol-Myers Squibb’s goal was to achieve the top spot in world pharmaceutical sales by the year 2001. The company received FDA approval for its cholesterol-lowering drug, Pravachol, in 1991. Company executives predicted that Pravachol, which helps offset the effects of heart disease and allows some patients to forego surgery, would become a billion dollar drug.

Bristol-Myers Squibb also had several other drugs in various stages of development. One important and promising drug in development was Videx, used to fight AIDS. Another important development was Taxol, an anticancer drug made from the bark of the Pacific yew tree. The FDA gave the company the go-ahead in early 1993 to market Taxol to ovarian cancer patients. However, in February 1993, the U.S. Subcommittee on Regulation, Business Opportunities, and Energy accused Bristol-Myers Squibb and several other pharmaceutical companies of overpricing, pointing to Taxol’s price of six to eight thousand dollars per complete treatment. However, the company maintained that the price was not excessive, and declined to supply the subcommittee with the data used to set the price.

By the end of the first quarter of 1993, sales at Bristol-Myers Squibb had increased four percent or $2.8 billion. During that quarter, two committees of the U.S. Food and Drug Administration gave the go-ahead to new uses of two of the company’s existing products: Capoten, for use by patients who had suffered a heart attack, and Megace, for treatment of anorexia and HIV-related weight loss. At the same time, generic drug makers began working on a non-branded version of Capoten, whose patent is due to expire in 1995.

In January 1993, Bristol signed a contract with Mead Johnson, establishing a joint venture to produce and sell Enfamil and Enfapro infant formulas in Guangzhou, China. Nevertheless, the main focus of research at Bristol-Myers Squibb remains in anti-cancer drugs. Company scientists seek to develop drugs that will kill cancerous cells with fewer side effects in the patient.

The future of Bristol-Myers Squibb Company is dependent upon continued product leadership on an international basis in each of its highly competitive core businesses, as well as a continuing commitment to research and development of new products. Several forces—including an aging population, an increasing percentage of women in the full-time workforce, and a growing number of nontraditional households—are expected to create needs that will have a strong influence on the company’s consumer products business.