Bristol-Myers braces for Abilify patent loss, predicting big sales drop for 2015

Bristol-Myers Squibb ($BMY) took a top-line hit in 2014, but that's mostly because it sold its share of a diabetes alliance to partner AstraZeneca ($AZN). This year, it's looking for an even bigger slide--with no big divestment to blame.

Revenue for the year came in at $15.9 billion, a 3% slide, but after backing out the diabetes sale, that drop becomes a 6% increase. Bristol-Myers has Yervoy and Eliquis to thank for that, with sales of the melanoma fighter growing by 36%, and Eliquis jumping to $774 million from a paltry $146 million in 2013.

But the fourth quarter offered a glimpse of things to come. The loss of diabetes sales took 6% sales growth down to a 4% deficit--pretty similar to the year-long results. But Abilify--Bristol-Myers' top seller--plummeted by 25% in the period, to $476 million. For the full year, Abilify contributed $2.02 billion to Bristol-Myers sales, some 12% less than 2013 sales (total worldwide sales of Abilify topped $5.5 billion last year, with partner Otsuka taking the rest). And Abilify's U.S. patent won't expire till May.

That's one big reason why Bristol-Myers' expectations for 2015 are even lower. Abilify has already been defending against competition from a longer-acting injection, Abilify Maintena, launched by Danish drugmaker Lundbeck and Otsuka, Bristol's partner on the original oral formula. Come May, the pill will face low-price generic rivals, which will take a bigger bite out of sales.

Another reason: the strong dollar. Thanks to Abilify and currency issues, Bristol-Myers is looking toward 2015 sales somewhere between $14.4 billion and $15 billion, a 10% drop on the low end--and far short of analysts' predicted $15.6 billion.

If 2014 is a guide, Yervoy and Eliquis will help offset the Abilify losses, which analysts see bringing in $577 million for the year. The company will also get some help from Opdivo, a cancer-fighting immunotherapy approved in December--though Opdivo has blockbuster aspirations, how quickly its sales can grow remains to be seen. The drug will be facing head-to-head competition from Merck's ($MRK) Keytruda.

To offset the sales slide, Bristol-Myers will be cutting costs. The company says advertising and promotional expenses will drop more than 10%--in the mid- to high-teen-digit range. Marketing, sales and admin will also decline, in the mid- to high-single digits. R&D spending will take the smallest punch, with a low-single-digit decrease.

- read the release from Bristol-Myers

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