Apotex recently settled its dispute regarding the blockbuster blood thinner Plavix with Bristol-Myers Squibb Company (BMY) and partner Sanofi (SNY). The patent related dispute, which started in 2002, was resolved after Apotex paid Bristol-Myers and Sanofi approximately $444.2 million as damages.

Apotex parted with the amount following the decision of an US appeals court in October 2011 which upheld the intellectual property rights related to Plavix. Apotex made further payments to the tune of $1.26 million (post-judgment interest) and $0.9 million (legal cost). The payments by Apotex were welcomed by both Bristol-Myers and Sanofi as the at-risk launch of a generic version of Plavix by Apotex in 2006 resulted in significant loss of revenues.

Plavix is scheduled to go off patent in the US within a few months (May 17, 2012). The US genericization of Plavix, which contributed $7.1 billion to Bristol-Myers’ total revenue in 2011, is expected to substantially hit 2012 earnings and revenues. Management expects 2012 revenue to decline from 2011 levels. Bristol-Myers expects to generate just $2.7 billion in sales from Plavix in 2012.

Bristol-Myers is trying to combat the threat of genericization hanging over many of its key drugs by inking deals and acquisitions and introducing new products. Many new products were launched/ approved in 2011.

Key product approvals at Bristol-Myers in 2011 include EU approval of Eliquis (apixaban) for preventing venous thromboembolic events in adults who have undergone elective hip or knee replacement surgery; US approval of Erbitux in combination with platinum-based chemotherapy and 5-fluorouracil as a first-line therapy in patients suffering from recurrent locoregional or metastatic head and neck cancer, US and EU approval of Yervoy for treating patients suffering from metastatic melanoma, the severest form of skin-cancer; US approval of a subcutaneous formulation of Orencia for treating adults suffering from moderate to severe rheumatoid arthritis; EU approval of Onglyza in combination with insulin (with or without metformin) for type II diabetes; and US and EU approval of Nulojix (belatacept) for the prevention of the rejection of transplanted kidneys in adults.

We expect Bristol-Myers to continue introducing new products throughout 2012.

Our Recommendation

We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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