Bristol-Myers Squibb Company

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Bristol-Myers Squibb Company

founded: 1887

Contact Information:

headquarters: 345 park ave.
new york, ny 10154-0037 phone: (212)546-4000 fax: (212)546-4020 url: http://www.bms.com

OVERVIEW

Bristol-Myers Squibb is one of the largest pharmaceutical companies in the United States. The company has three core business groups: Worldwide Medicines, Nutritionals and Medical Devices, and Worldwide Beauty Care. The pharmaceutical division (part of the Worldwide Medicines group) accounted for 60 percent of the company's revenues in 1998. That division focused on the development of cardiovascular, anti-infective, and anticancer drugs during the late 1990s.

Bristol-Myers Squibb competes with many pharmaceutical companies, such as Merck, Ciba-Geigy, and Pfizer, and with consumer product companies, such as Procter & Gamble and Gillette. The company's strength is attributed to its wide range of products and competitive positioning in the market. The company's future lies in maintaining and expanding its core product lines, developing new products, and expanding through licensing, partnerships, collaborations, and acquisitions.

COMPANY FINANCES

Bristol-Myers Squibb earned 1997 revenues of $16.7 billion, up from $15 billion in 1996. The company's net income also rose, from $2.8 billion in 1996 to $3.2 billion in 1997. Almost 60 percent of sales—approximately $11 billion—were generated in the United States. By product segment, the company's pharmaceuticals earned the largest percentage, 60 percent of revenues ($9.9 billion); nutritional products earned $1.9 billion (11 percent); medical devices earned $1.8 billion (11 percent); beauty care earned $1.7 billion (10 percent); and consumer medicines earned $1.3 billion (8 percent).

In 1997, Bristol-Myers Squibb earned $3.14 per share, up from earnings per share (EPS) of $2.80 in 1996. According to the company's first quarter reports, 1998 earnings per share (as of mid-1998) were $3.58. The company's stock was priced around $115 per share in mid-1998. Its 52-week high was $117, and its 52-week low was $71 per share.

ANALYSTS' OPINIONS

Analysts at Zack's Investment Research reported increased earnings per share for the company in mid-1998 (at $3.57 per share), and they expected the company's growth to continue even more rapidly. The firm projected earnings of $4.06 per share for Bristol-Myers Squibb during fiscal year 1999. However, recommendations for stock transactions were mixed, with about one-third of analysts recommending a "strong buy" rating for the company, another third recommending a "moderate buy," and remaining analysts recommending a "hold" rating. While the company's performance was clearly not expected to falter, stock prices were at historic highs, and some felt the company would not be able to sustain its growth rates.

HISTORY

Upon developing a plan for producing pure ether and chloroform, Dr. Edward Squibb founded Squibb in 1858. Dr. Squibb did fairly well, passing the business on to his sons in 1891. Squibb provided penicillin and morphine to troops during World War II. Mathieson Chemical bought the company in 1952, and Olin Industries bought Mathieson in 1953. Olin Mathieson Chemical was formed but Squibb retained its identity. During the late 1960s and early 1970s, Olin Mathieson Chemical reorganized and the company's name was changed to Squibb Corporation. During the late 1970s, Squibb introduced Capoten, a major cardiovascular drug; Capoten was the first drug to attack a specific disease-causing agent and was an important product for Squibb.

William Bristol and John Myers bought the Clinton Pharmaceutical Company in 1887. The company originally sold pharmaceuticals in bulk quantities. In 1900, the company incorporated and changed its name to Bristol-Myers. Some of the company's early products included Sal Hepatica, a mineral salt laxative, and Ipana, a toothpaste containing a disinfectant. During World War II, Bristol-Myers manufactured penicillin for the Allied armed forces. Bristol-Myers continued to grow and began to expand internationally during the 1950s. The company expanded partially through acquisition, obtaining companies such as Clairol, Mead Johnson, and Zimmer. New drugs for treating cancer and anxiety were introduced in the 1970s and 1980s.

FAST FACTS: About Bristol-Myers Squibb Company

Ownership: Bristol-Myers Squibb is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: BMY

Officers: Charles A. Heimbold, Jr., Chmn. & CEO, 64; Michael F. Mee, Sr. VP & CFO, 55; Charles G. Tharp, Sr. VP, Human Resources, 46; Kenneth E. Weg, Exec. VP & Pres., Worldwide Medicines Group, 59

Employees: 53,600

Principal Subsidiary Companies: Bristol-Myers Squibb's principal subsidiaries are: Bristol-Myers Products; Bristol-Myers Squibb Co. Industrial Div.; Bristol-Myers Squibb Co. Mead Johnson Nutritionals; Calgon Vestal Laboratories; ConvaTec; Clairol Inc.; Maxtrix Essentials; Edward Weck Inc.; Mead Johnson Pharmaceuticals; Westwood-Squibb Pharmaceuticals Inc.; and Zimmer Inc.

Chief Competitors: As a manufacturer and marketer of pharmaceuticals and healthcare products, Bristol-Myers Squibb's competitors include: Abbott Labs; American Home Products; Amgen; Ballard Medical; Bayer; Biogen; Biomet; Chiron Corp.; Ciba-Geigy; Danek Group; Dial; Dow Chemical; DuPont; Eli Lilly; Genentech; Gillette; Glaxo Wellcome; Glycomed; Hoechst; Immunex; Johnson & Johnson; L'Oreal; Merck; Mitek Surgical; Monsanto; Novo Nordisk; Pfizer; Pharmacia & Upjohn; Procter & Gamble; Rhone-Poulenc; Roche; St. Jude Medical; Sandoz; Schering-Plough; SmithKline Beecham; U.S. Surgical; and Warner-Lambert.

In 1989, Bristol-Myers acquired Squibb Corporation, forming Bristol-Myers Squibb. Together, the companies offered a strong consumer health product line, an expanding prescription drug line, biomedical research facilities, and a large budget for further research. When formed, the new company became the second largest pharmaceutical company in the world. Since then, the company has met with more success in product development.

In 1996, Bristol-Myers Squibb introduced Pravachol, a drug that lowers cholesterol, and it became the company's second drug to earn more than $1 billion in sales. In 1997, Bristol-Myers Squibb acquired the rights to develop two protease-inhibitor compounds as possible treatments for HIV and AIDS from Novartis. It also began offering Excedrin Migraine—the first and only over-the-counter migraine medication to get FDA approval.

STRATEGY

Bristol-Myers Squibb's strategy is to focus on the customer. New products are researched and new partnerships are formed to offer customers the broadest line of health and personal care products possible. The company has also developed a policy called "segment selling." Sales teams are structured to offer a diverse mix of products to meet customers' needs. Segment selling has achieved cost-saving benefits and has given sales representatives more time to promote other products.

Bristol-Myers Squibb represents its products to customers as "answers." For example, the company was committed to working with Medicaid programs, and to facilitate that effort, it developed an econometric matrix demonstrating cost-effective answers to healthcare dilemmas. Presentations were made to Medicaid officials to illustrate how the use of pharmaceuticals could control healthcare costs and how budgets would be affected. As a result, both Florida and Texas decided not to put restrictions on monthly per patient spending on prescription drugs.

In 1998, the company expanded its line of beauty aids with the purchase of privately held Redmond Products, maker of Aussie natural hair care products.

INFLUENCES

Bristol-Myers Squibb has faced many challenges throughout its history. The company was challenged in the early 1960s when Johnson & Johnson introduced the over-the-counter nonaspirin pain reliever, Tylenol. Bristol-Myers Squibb fought back with its introduction of Datril and priced it below Tylenol. Still, during the late 1960s, growth was slow and many new products were not selling. The company decided to concentrate on advertising its core brands and increasing its healthcare products line. This line was expanded with the acquisitions of Zimmer Manufacturing, an orthopedic and surgical products company, and Unitek Corporation, a supplier of dental equipment.

In the mid-1970s, there was growing concern for the amount of flourocarbons being emitted into the atmosphere with the use of aerosol sprays. Bristol-Myers Squibb responded by stepping up advertising of its Ban roll-on type deodorant. Subsequently, Ban became the number one selling deodorant. Similarly, in 1977, the National Cancer Institute discovered a link between a common hair colorant ingredient, 2-4 DAA, and cancer in laboratory rats. Bristol-Myers responded by offering a new line of hair-coloring products and removed the questionable ingredient from its original line of products.

CHRONOLOGY: Key Dates for Bristol-Myers Squibb Company

1858:: Dr. Squibb establishes Squibb, producing pure ether and chloroform
1887:: William Bristol and John Myers buy a failing pharmaceutical company in New York called Clinton Pharmaceutical Company
1898:: Clinton Pharmaceutical becomes Bristol-Myers Company
1900:: Bristol-Myers incorporates
1928:: Bristol-Myers and other drug companies become a part of Drug, Inc., a newly formed holding company
1933:: Drug, Inc. folds
1952:: Mathieson Chemical buys Squibb and Olin Industries buys Mathieson
1959:: Bristol-Myers acquires Clairol
1984:: Upjohn and Bristol-Myers sign an agreement allowing Bristol-Myers to develop Nuprin, a non-prescription form of ibuprofen
1989:: Bristol-Myers merges with Squibb Corporation to form Bristol-Myers Squibb
1997:: Bristol acquires the rights to develop possible treatments for HIV and AIDS; releases Excedrin Migraine

Product-tampering became a problem in the early 1980s, and Bristol-Myers Squibb's Excedrin was one such product that was affected. In 1983, Bristol-Myers introduced tamper-resistant packaging for its capsule products in response to the new Food and Drug Administration regulation. Tampering occurred again in 1986, this time causing two deaths. Bristol-Myers recalled the Excedrin capsules and pulled all of its nonprescription capsules from shelves. Capsules were replaced with caplets, a capsule-shaped pill with a special coating. The company became the second in its industry to discontinue the use of capsules in the over-the-counter market.

One of Bristol-Myers Squibb's most successful drugs was Taxol, the company's brand name for paclitaxel, a trace compound found during the 1970s that National Cancer Institute researchers discovered stops the growth of some cancerous tumors. Though the company did not discover the drug, it finished clinical studies for the Institute in cooperation with Hauser, Inc., a Colorado lab that worked out issues related to extracting the drug from its source—yew trees. Though the company couldn't get a patent since it did not invent the drug, it received five years of exclusive marketing from the government as a reward for its efforts in product development. Since its release, Taxol has turned into an incredibly successful method of treatment for ovarian and breast cancer—as well as a cash cow for Bristol-Myers Squibb. In 1997, the drug had worldwide sales of $941 million and became the company's second-largest seller. It was estimated that Taxol accounted for up to 15 percent of 1997 profits of $3.2 billion.

CURRENT TRENDS

The demand for hair color and hair care products increased throughout the 1980s and 1990s as a result of the expanding middle-aged market. Taking advantage of a burgeoning market, the company's Clairol subsidiary stepped up advertising and revamped its Nice 'n Easy and Ultress brands. The Ultress brand featured a more contemporary package and supermodel Linda Evangelista as its spokesperson.

Bristol-Myers Squibb's subsidiary Zimmer, Inc. was approved by the Food and Drug Administration in 1998 to manufacture and market a new formula for "cross-linked polyethylene." The formula, developed at the Massachusetts Institute of Technology (MIT), would improve wear performance on joint replacement components. Also in the medical arena, the company was sponsoring a public awareness initiative for diabetes. As part of this effort, Bristol-Myers Squibb was hoping to get at least 1 million Americans to get their blood sugar levels tested, as well as their level of risk for type 2 diabetes.

In mid-1998, Bristol-Myers Squibb also expected to launch a new "pharmaceutical robot" designed to mix compounds, perform experiments, and measure reactions. Named the "Haystack," this robot was expected to perform one month's worth of human experimentation in a single day. Bristol-Myers Squibb would join the ranks of Glaxo Wellcome, Smithkline Beecham, and Zeneca Agrochemicals, all of whom already use similar automation in product research and development.

PRODUCTS

Bristol-Myers Squibb has four product categories in three core business areas: prescription drugs and consumer health products (Worldwide Medicines group), medical devices and toiletries (Medical Devices group), and beauty aids (Worldwide Beauty Care and Nutritional group). In 1998, prescription drugs accounted for 60 percent of the company's total sales. The company's major pharmaceutical drugs include cardiovascular drugs such as Capoten, Corgard, Monopril, and Pravachol; cancer drugs such as Platinol, TAXOL, and VePesid; an antibiotic drug called Azactam; an antidiabetic drug named Glucophage; a cholesterol reducer called Questran; and an AIDS treatment drug named VIDEX. The consumer health products sector includes such products Bufferin, Excedrin, Comtrex, and Nuprin.

Popular brands of toiletries and beauty aids include Herbal Essences (shampoo and conditioner), Ban (deodorant), Keri (lotion), Miss Clairol (hair coloring), Nice 'n Easy (hair coloring), Theragran (vitamins), and Vavoom (hair sprays). Medical devices offered include products for minimally invasive surgery, as well as orthopedic and surgical instruments.

In 1995, Bristol-Myers Squibb's Mead Johnson Nutritionals subsidiary launched its Boost nutritional drink. The drink was targeted at active adults seeking quality calories in the quest to stay physically fit. Boost was a milk-based, lactose-free drink that was high in calcium and low in saturated fat with 25 vitamins and minerals. In 1998, Mead Johnson again sought to capitalize on this trend, introducing "Choice dm" nutrition bars and through its purchase of "Choco Milk," one of Mexico's leading nutritional supplements.

CORPORATE CITIZENSHIP

Bristol-Myers Squibb has always strongly supported medical research. In 1977, what is now known as the Bristol-Myers Squibb Unrestricted Biomedical Research Grants Program was established. The plan awarded grants to medical schools, hospitals, and research centers in the United States and around the world. The medical research community praised the program since it supported scientific research in a time of limited government assistance. The program also forged a better relationship between academic scientists and the pharmaceutical industry. Since 1984, the company has also offered its Fellowship Program in Academic Medicine for Minority Students. Through the program, more than 280 students were awarded grants of up to $6,000, which enable the students to spend 8-12 weeks studying under biomedical researchers.

Bristol-Myers Squibb also made concentrated efforts to "prevent and minimize pollution, to reduce accidents, conserve resources, and promote EHS [Environmental Health and Safety] protection, education, and technology transfer around the globe." Employees from varying disciplines within the company worked together to develop business improvements that would also prove beneficial to the environment.

GLOBAL PRESENCE

Bristol-Myers Squibb has a very strong global presence. With international sales representing almost 50 percent of its business, Bristol-Myers Squibb remains deeply committed to strengthening current and establishing new business relationships in the international market. The company's largest markets are in the United States, France, Japan, Germany, and Canada. Since growth has been slowing in mature markets such as the United States and Europe, Bristol-Myers Squibb continues its expansion plans to Eastern Europe, Latin America, and Asia. In some cases, Bristol-Myers Squibb has established warehousing systems, and in other cases the company has formed alliances with local or competing companies.

In China, the only means to conduct business was through the establishment of plant operations, and Sino-American Shanghai Squibb was formed as a result. The joint pharmaceutical venture made Bristol-Myers Squibb the first western pharmaceutical company to break into the Chinese market. Bristol-Myers Squibb's subsidiary Zimmer opened a teaching facility in Shanghai in 1994. The facility, located at the Shanghai Academy of Sciences, provided ongoing education in orthopedic surgery to Chinese surgeons.

Japan is the second largest market for Bristol-Myers Squibb. In 1994, the company opened a new research laboratory in Kanagawa to unite research efforts.

In 1994, a European market research study led Bristol-Myers Squibb to acquire A/S GEA Farmaceutisk Fabrik, a Scandinavian manufacturer of generic brand pharmaceuticals. The purchase increased Bristol-Myers Squibb's generic brand market share in Europe. With business opportunities continuing to grow in Russia and Eastern Europe, Bristol-Myers Squibb's subsidiaries have opened plants in Poland, Hungary, and the Czech Republic.

EMPLOYMENT

At Bristol-Myers Squibb, diversity was a clearly stated value. In 1996, the company produced a full report devoted to the issue titled, "Diversity and Equal Opportunity at Bristol-Myers Squibb Company." Among efforts made by the company to further that corporate goal were minority fellowships, college and graduate internship programs, high school programs, minority recruitment, community program support, and financial assistance.