BMS to lay off 10% of employees, continue cardiovascular drug efforts

Loss of Plavix patent to affect BMS. Source: Bloomberg

Dec. 6 – In a Wednesday meeting with investors, New York City-based Bristol-Myers Squibb (BMS) announced it will lay off approximately 10 percent of its 43,000 employees and close half of its production facilities, which would cut costs by $1.5 billion by 2010 when BMS is scheduled to lose its exclusivity to the Plavix patent.

The company said it began making layoffs last week and the pace would quicken next year and into 2009. BMS joins Pfizer, Merck and other pharmaceutical companies forced to make dramatic job cuts in response to competition from generic drug makers.

“It is difficult to see our valued colleagues leave the company, but right-sizing our workforce across all areas is critical to achieving our productivity goals and enhancing the competitive position of the company,” said James Cornelius, CEO of BMS. “While we are reducing headcount in certain functions, we will continue to invest in R&D, biologics and commercialization talent.”

However, BMS plans to develop a strategy for building a pipeline of products for cardiovascular drugs, late-stage programs in oncology, diabetes, cardiovascular disease and solid organ transplant rejection, including:

• Developmental diabetes compounds saxagliptin, and dapagliflozin, both of which are being developed in partnership with AstraZeneca; the company reiterated its plan to submit saxagliptin for filing with the FDA in 2008; and
• An oral factor Xa inhibitor, apixaban, under development in partnership with Pfizer, with the potential to provide predictable and reliable anti-coagulation with a wider therapeutic window than current therapies.

The company also plans to sell its Medical Imaging business, which is headquartered in North Billerica, Mass. BMS currently maintains the rights to radiopharmaceuticals and contrast agent products, of which Definity and Cardiolite have been the most profitable. In October, the FDA added a black box warnings to Definity over concerns that there is an increased diagnosis of heart problems during its use in ultrasound imaging.

Cardiolite, which entered the U.S. market in 1990, is an FDA-approved myocardial perfusion nuclear cardiology imaging agent indicated for detecting coronary artery disease by localizing myocardial ischemia and infarction.

According to the American Chemical Society, Cardiolite is the leading cardiac imaging agent in the world, but BMS will also soon lose its patent exclusivity, which will make the company subject to generic competition.

The company is currently reviewing strategic alternatives for its ConvaTec and Mead Johnson businesses as well.

"We remain fully aware of the important contributions these businesses have made to earnings and cash flow, and we will take these factors into full consideration when weighing our strategic options," said James M. Cornelius CEO of BMS.