Bristol-Myers Squibb: makes move to cut costs

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Dec 19, 2007 (Datamonitor via COMTEX) -- BMY | charts | news | PowerRating -- Bristol-Myers Squibb has agreed to the sale of its medical imaging unit to a leading private equity firm in a $525 million transaction, two weeks after announcing plans to reduce its workforce by 10%, to concentrate resources on strengthening R&D productivity. BMS faces several key patent expiries at the end of the decade, and will rely on new launches to offset losses from its older products.

Bristol-Myers Squibb is to sell its medical imaging unit, BMS MI, to leading private equity firm Avista Capital Partners. BMS will receive $525 million for the unit, which supplies medical imaging products for nuclear and ultrasound cardiovascular diagnostic imaging procedures. The deal is expected to close by the end of January 2008 subject to customary regulatory approvals, and will see BMS MI become an independent company with a new name.

Don Kiepert, founder and former chairman, CEO, and president of Point Therapeutics, will head the company. BMS MI will be New York-based Avista's second investment in the healthcare industry in the space of a week, having announced the acquisition of Boston Scientific's Fluid Management and Venous Access businesses on December 13, 2007 for $425 million.

The sale comes two weeks after BMS announced plans to cut 4,300 jobs and close more than half of its manufacturing plants in a move to save $1.5 billion in costs by 2010. With a global workforce of 43,000, the redundancies will reduce staff numbers by 10%.

The cost-cutting decision will enable BMS to concentrate resources on its R&D efforts, with particular focus on the continued development of specialist biotech products, such as the cancer drug ipilimumab; a monoclonal antibody (mAb) in Phase III clinical trials; and biologic Orencia (abatacept), launched for the treatment of rheumatoid arthritis in 2006. Moving away from a historically high focus on the cardiovascular market, BMS is increasing its presence in the oncology and immunology & inflammation markets, forecast to experience higher market growth industry-wide.

Given the impending patent expiries of several of BMS's older products, including the best-selling antithrombotic Plavix (clopidogrel) in 2011, the company's investment in its pipeline is essential to offset forecast losses towards the end of the decade. The sale of BMS MI marks the first major development in the company's restructuring strategy.

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