Bristol-Myers' Post-Patent Plan

Elizabeth is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

First there was Pfizer's Lipitor, the cholesterol-reducing drug, which lost its patent in November 2011.

Next up: Plavix, the blood-thinning drug designed to prevent stroke and heart attacks, is set to have its patent expire on May 17, 2012.

Bristol-Myers Squibb (NYSE: BMY) distributes this French pharmaceutical Sanofi-Aventis (NYSE: SNY) discovered anti-clotting drug, which brought in nearly $9 billion for Bristol in global sales last year. 

This Bristol-Myers Squibb patent expiration reality comes off a stunning year for Bristol. Over the course of the year, Bristol's stock price increased over 30 percent to $35. When compared to share price increases of roughly 15 percent from competitors Pfizer (NYSE: PFE), Abbott Laboratories, (NYSE: ABT), and Eli Lilly (NYSE: LLY), Bristol-Myers Squibb was the clear 2012 stand out in the pharmaceutical world. Bristol's share price has sustained steady long term gains over the last five years.

It's thought that Plavix's patent expiration will result in a sales drop of about $18 million, or 13 percent. Bristol also faces another top selling drug patent expiration in 2012: Avapro, a high blood pressure medication collecting over $1.2 billion in sales globally in 2010.

Bristol's Post-Patent Expiration Strategies

So, what's Bristol doing about this impending patent expiration? It's not standing still, that's for sure. In an attempt to fill the void of patent expiration on existing drugs, it's investing in research and development for new drugs and participating in acquisitions and licensing arranagements.

1) Pipeline of New Drugs

For instance, early this year, Bristol received FDA approval for its drug Yervoy. Yervoy is the first drug that has been proven to extend survival rates by several months of patients with late-stage metastatic melanoma, which is the most life-threatening type of skin cancer. According to the National Institute of Health, melanoma is the fifth and seventh most common form of skin cancer in American men and American women, respectively. With these statistics, analysts expect Yervoy to be a multi-billion dollar seller for Bristol. It's important to point out that Yervoy is a drug that extends life. And even in a down economy, people will typically pay to extend their life.

2) Biotech Acquisitions

In its "string of pearls" strategy, Bristol is also pursuing pharmaceutical and biological acquisitions. One such acquisition, Amira Pharmaceuticals, is one pearl in its strategy. Bristol acquired Amira Pharmaceuticals, a private pharmaceutical company centered on the early discovery and development of new drugs to treat fibrotic and inflammatory disease, for $325 million in cash. The deal was finalized in September 2011.

3) Licensing

Licensing is another diversification strategy for dealing with upcoming patent expirations. In late October, Bristol-Myers Squibb announced a licensing agreement to develop and commercialize a once a day compound containing REYATAZ, a drug compound used to battle HIV.

Final Thoughts


In the pharmaceutical industry, patent exclusivity is key to sales and profits. It enables a pharmaceutical company to enjoy a long run of high profitability periods as evidence by both Pfizer and Bristol. While it's time consuming to pursue new drug research and development -- even with faster FDA drug approval rates -- Pharma companies must not only keep new drug developments in the pipeline, but adjust and develop new strategies like acquisitions and licensing.

Bristol seems to be doing all three.


Fool blogger Liz Magill owns no shares in any of the companies mentioned above at the time of writing.

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