Yesterday, Bristol-Myers Squibb (BMY) announced that its lead drug, Plavix, will be reviewed by the U.S. Patent and Trademark Office (PTO). Plavix is indicated for the reduction of the risk of heart attacks or strokes in patients with atherosclerosis (the build-up of plaque and hardening of the arteries). The drug is co-promoted with pharmaceutical giant Sanofi-Aventis (SNY).

Plavix sales in the second quarter were $1,539 million, up 11%. Sales in 2008 were up 18% to $5.6 billion, making it one of the world’s best-selling pharmaceutical products.

The patent of the antiplatelet blood thinner is expected to expire in November 2011, although the companies might win a six-month extension for conducting pediatric studies. Canada-based Apotex has requested the U.S. Patent and Trademark Office to review the patent as the company is looking to bring generic versions of the drug to the market before 2011.

Meanwhile, Plavix will face new competition from Lilly’s (LLY) Effient, which received FDA approval recently. Phase III data comparing Effient to Plavix shows that Effient is more effective in reducing major adverse cardiovascular events. However, there is an increased bleeding risk to Effient, so we believe that Plavix use and sales of the drug should remain strong until the patent expiration in 2011.

In order to compensate for the loss in revenues once Plavix loses exclusivity, Bristol-Myers is working on bringing new products to market. Additionally, management is working hard to reduce costs and shed less profitable and non-core businesses.

The recently announced $1 billion extension in cost cuts in 2012-2013, the extension of the Abilify agreement with Otsuka, and the potential acquisition of Medarex, which has cleared the regulatory review recently, are the latest examples that management is taking meaningful steps to prepare for the loss of exclusivity of Plavix. We have an Outperform rating on Bristol-Myers.
Read the full analyst report on “BMY”
Read the full analyst report on “SNY”
Read the full analyst report on “LLY”
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