October 31, 2006
Plavix probe widens; BMS earnings take a beating
Bristol-Myers Squibb said generic competition on its biggest drug, Plavix, hamstrung third-quarter earnings, while a federal probe expanded to determine whether an ill-fated deal to protect the Plavix patent violated US securities law. The probe, which is being conducted by the Department of Justice, has widened to focus on possible violations of the company’s 2004 consent decree with the Securities and Exchange Commission. BMS may have run afoul of the consent decree when, in its efforts to keep generic Plavix off the market, it and co-marketer Sanofi-Aventis drew up a settlement with generic drug firm Apotex to settle patent litigation. The settlement fell apart, and in July the Justice Department opened the investigation. Apotex launched a generic version Aug. 8 before the patent case could be heard, sapping as much as $600 million in revenue before shipments stopped, BMS said. As a result, US sales of Plavix plunged 43% in the third quarter to $474 million, from $833 million in the same period in 2005. That, and the loss of exclusivity for cholesterol drug Pravachol earlier this year, depressed third-quarter earnings to $338 million, compared to $964 million for the same period in 2005, when BMS sold its consumer business. Generic Plavix should continue to have an effect on the firm’s sales until the first quarter of 2007, BMS said. A federal judge barred Apotex from any additional sales. In the wake of the Plavix flop, Peter Dolan, former BMS CEO, and former general counsel Richard Willard, were fired. Interim CEO Jim Cornelius sought to quell takeover rumors, saying during a conference call that the company wasn’t shopping for a buyer, New Jersey newspaper The Star-Ledger reported. “We have one of the best pipelines in the industry and the right team in place to execute our strategy,” Cornelius said in a statement. Some recently launched drugs are helping offset losses. Sales of Sprycel (leukemia), Orencia (rheumatoid arthritis) and Baraclude (hepatitis B) were $34 million, $22 million and $11 million, respectively, in the third quarter. Inline products Erbitux (cancer), Reyataz (AIDS), Abilify (antipsychotic) and Avapro (high blood pressure), also performed well, though sales were overshadowed by generic Plavix. Meanwhile, the first Plavix personal injury lawsuit has been filed against Bristol-Myers Squibb and Sanofi-Aventis. The suit was filed by law firm Hersh, Hersh and Miller Associates on behalf of Dorothy Hall and Thomas Hall, husband and wife. Hall was prescribed and used Plavix from Dec. 20, 2002, to Oct. 4, 2005, for the purpose of preventing a heart attack or stroke, her lawyers said. She thereafter suffered two separate strokes, each requiring medical attention. Had Hall been properly warned of the risks of using Plavix, she never would have used it, her attorneys added. This personal injury lawsuit comes days after third-party payors filed a class action against the drugmakers, alleging Plavix causes much higher risks of heart attack, stroke, internal bleeding and death than previously reported.