Bristol-Myers Squibb (BMS) is one of the largest pharmaceutical companies in the world, with 28,000 employees and $16.4 billion in sales in 2013.
The two companies that combined to form Bristol-Myers Squibb in 1989 share long histories of research and product development. In 1858, a young U.S. Navy doctor named Edward Robinson Squibb became so dissatisfied with the poor quality of medicines available during the Mexican War that he created his own pharmaceutical laboratory. E.R. Squibb, M.D., was founded in Brooklyn to produce consistently pure medicines. During the Civil War, Squibb became a major source of medicines for the Union Army. He invented the “Squibb pannier,” a compact medical kit that doctors could use on the battlefield.
|Fast Facts about Bristol-Myers Squibb|
|Established: 1858; 1887|
|Founders: Edward Squibb, William Bristol and John Myers|
|Headquarters: New York City|
|Size: 28,000 employees worldwide|
|2013 Revenue: $16.4 billion|
William McLaren Bristol and John Ripley Myers founded the second half of the company in 1887. After investing $5,000 in a failing drug manufacturing firm called Clinton Pharmaceutical Company, the friends installed themselves as president and vice president. Within a decade, they developed a national bestseller: “Sal Hepatica,” a mineral salt laxative. In 1898, the company changed its name from Clinton Pharmaceuticals to Bristol, Myers (the comma was eventually replaced with a hyphen).
The company struggled during the Great Depression and refocused its efforts on more lucrative consumer products such as laxatives and deodorant. E.R. Squibb and Sons continued to produce medical products and drugs such as castor oil and antibiotics. During World War II, both companies became leading suppliers of penicillin for the war effort. By 1943, Squibb operated the largest penicillin production plant in the world in New Brunswick, New Jersey.
After the war and into the 1960s, both Squibb and Bristol-Myers expanded their production and research of antibiotics. They merged in 1989, creating a powerhouse pharmaceutical company that was then the second-largest in the world. Since then, Bristol-Myers Squibb has continued to pursue cutting-edge clinical research while maintaining a significant philanthropic program.
In 2001, BMS spun off a medical devices division, Zimmer Holdings Inc. In 2012, in the culmination of a series of deals over the years to buy or partner with other drug companies, Bristol-Myers Squibb announced the acquisition of Amylin Pharmaceuticals, a biopharmaceutical company focused on research, development and commercialization of type 2 diabetes drugs, including the troubled Byetta and Bydureon.
Missteps and Scandals
A solid record of research and performance stretching back more than 100 years has not made Bristol-Myers Squibb immune to scandal.
In 2001, BMS reportedly persuaded wholesale customers to purchase about $2 billion more of drugs than they needed so the company could meet its sales goal that year. This accounting gimmick, known as “channel stuffing,” resulted in a sharp drop in revenue the next year and investigations by the SEC and Justice Department. Frederick Schiff, the former chief financial officer, was indicted on securities fraud charges. The company agreed to pay a total of $839 million in restitution.
In 2007, BMS agreed to pay more than $515 million to resolve a broad array of cases involving its drug marketing and pricing. In addition to overcharging the government for drugs, Bristol was also accused of promoting off-label use of the antipsychotic Abilify and setting inflated prices for a wide array of drugs.
The U.S. Food and Drug Administration (FDA) in 2010 sent a warning letter to Bristol-Myers Squibb demanding compliance with regulations, citing microbiological contamination of drug products, environmental contaminations in facilities, and a lack of scientifically sound standard for sampling plans and test procedures. Some of these infractions were repeat violations from inspections in 2005 and 2009.
Bristol has also faced serious problems with some of its drugs. Two of these products—Byetta and Bydureon—resulted in lawsuits against Amylin, and BMS could face liability as well. Eliquis lawsuits are expected in the future.
Byetta and Bydureon
Byetta is a twice-daily injection approved by the FDA to treat type 2 diabetes. Bydureon – a longer-lasting version of Byetta – is injected once a week. With $517.7 million in sales in 2011, Byetta was a tremendous success for its developer, Amylin Pharmaceuticals. When Bristol-Myers Squibb acquired Amylin in August 2012, it gained control of its blockbuster diabetes medications – and possibly liability for the drugs.
In a 2011 study published in the medical journal Gastroenterology, patients taking Byetta were found to be six times more likely to contract pancreatitis, a dangerous condition that causes the pancreas to become inflamed and can lead to hospitalization or death. Data also indicated that Byetta patients could be up to 49 times more likely to contract pancreatitis than patients taking other drugs in the same class.
These dangerous side effects resulted in lawsuits that could affect Bristol-Myers. Dozens of cases have been filed, and more are expected as more patients and their families become aware of dangerous complications that may have resulted from their use of Byetta or Bydureon.
Eliquis, a newer blood-thinning drug, is prescribed for the prevention of dangerous blood clots and stroke in patients with a common type of abnormal heart rhythm. Developed as an alternative to the blood thinner warfarin, Eliquis joins Pradaxa and Xarelto as a next-generation anticoagulant.
Pradaxa and Xarelto, however, have been linked to a very dangerous side effect—uncontrollable bleeding. Patients on warfarin can take vitamin K to counteract bleeding, but there is no known antidote for next-generation anticoagulants.
The manufacturer of Pradaxa faces thousands of lawsuits, which means manufacturers of all three drugs could find themselves in serious legal trouble if an antidote is not developed quickly.
Bristol-Myers Squibb has taken a hard hit in the last couple of years because of expirations on several of its most lucrative patents – including Plavix. Going forward, the company plans to focus on a strong research pipeline and double down on its “String of Pearls” strategy. The String of Pearls plan is an effort to accelerate discovery and development of new therapies by partnering with or acquiring both small and large pharmaceutical competitors. Today, more than 40 percent of BMS’s research pipeline comes from partnerships or alliances with other companies.
The U.S. Food and Drug Administration in January 2014 approved Farxiga (dapaglifozin), a new diabetes pill from Bristol-Meyers Squibb Co. and AstraZeneca after previously rejecting the drug. The approval came just as Bristol announced plans to sell its global diabetes business that was part of its collaboration with AstraZeneca.
Although legal liabilities from some of its products present problems for Bristol-Myers Squibb, the company’s strong reputation and heavy investments in research and corporate cooperation put it in a position to continue to grow.