Forbs | Matthew Herper, Forbes
Staff
Among the ranks of large
pharmaceutical companies this year, there was a clear standout: Bristol-Myers
Squibb. Pfizer, Abbott Laboratories, and Eli Lilly all managed to notch share
price increases of greater than 15%. So did Amgen, which continued to define
the border between the biotechnology companies and big pharma, which it looks a
bit more like every single year.
Bristol blew them all away.
Its share price increased 32% to $35 over the course of the year. And unlike
Pfizer, Lilly, and Amgen, Bristol’s share price is above where it was five
years ago, too, showing steady, long-term gains. Not bad considering the fact
that investors are bracing for the patent expiration of Plavix, the
blood-thinner Bristol shares with French drug giant Sanofi, next year. Plavix,
with annual sales of $7 billion, is the second-best-selling drug in the world,
and its loss will lead Bristol’s sales to drop by 13% to about $18 billion,
according to Sanford C. Bernstein.
But Bristol has managed to
innovate in the face of this impending loss. In March, the Food and Drug
Administration cleared Yervoy, the first drug to extend the survival of
patients with metastatic melanoma, by several months. Like many other cancer
drugs, it does have potentially toxic side effects, but analysts expect it to
be a multi-billion dollar seller.
In August, Bristol unveiled
results of an 18,000-patient clinical trial of the blood-thinner Eliquis, which
it is developing with Pfizer. Eliquis was the first anti-coagulant to prove
that it reduced the risk of death compared to warfarin, which has been the
standard of care for preventing strokes in patients with atrial fibrillation, a
common heart rhythm disorder, for seven decades. The other new blood thinners,
Pradaxa from Boehringer Ingelheim and Xarelto from Bayer and Johnson &
Johnson, have reached the market before Eliquis but were deemed essentially
similar. Eliquis is awaiting FDA approval.
Bristol chief executive
Lamberto Andreotti, 60, who took over last May, has built on the strategy put
in place by drug-and-medical-device industry veteran James Cornelius, who ran
the company for four years starting in 2006. Bristol had been hobbled by a
series of drug research failures, patent expirations, and accounting scandals
that led to the resignation of former chief executive Peter Dolan. The response
was to sell non-core businesses and brands, most notably the Mead Johnson baby
formula business, and focus on building a strong pharmaceutical presence –
partly by doing daring deals like its $2.4 billion purchase of biotechnology
firm Medarex in 2009. At the time, many researchers and analysts viewed the
deal with skepticism, but it gave Bristol full rights to Yervoy.
Now other companies seem to
be following the sell-off-and-focus strategy Bristol pioneered. One reason for
the rise in Pfizer shares this year was that the company is openly talking
about making divestitures, including one of its baby formula business. Abbott,
for its part, announced plans to split in two, creating a large, faster-growing
medical devices and products company and an even bigger standalone drug giant.
By facing its crises six years ago, Bristol-Myers Squibb became one of the drug
industry’s trendsetters.
Over a longer horizon,
Bristol still has not performed as well as Novo Nordisk, the diabetes
specialist that has outperformed most other drug makers over the past year but
which did not do as well this year, or biotechnology firms like Alexion,
focused on rare diseases, or Biogen Idec, focused on multiple sclerosis. Both
of those companies saw their stocks increase by about 70% in 2011.
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