Bristol-Myers Squibb Plans to Cut Costs

NEW YORK – Drug maker Bristol-Myers Squibb Co. said Monday it plans to cut costs by at least $500 million in 2007 through unspecified “productivity plans” and reiterated its intention to return the company to earnings growth that year.

The company also said it intends to save $100 million in 2008.

Bristol-Myers said the future savings will build on the estimated $200 million a year it cut in expenses in both 2004 and 2005. The company would not elaborate on the nature of its new cost-cutting plans.

Bristol-Myers said reducing costs is more imperative now than ever since the FDA required further data in October for the approval of diabetes drug Pargluva – information that would take years to put together.

The company said that it is considering a range of options from halting development of the drug completely to carrying out additional clinical trials to get the required data.

With Pargluva out of the picture, Bristol-Myers Squibb said it was “considering a range of options” on how to use the freed up capacity within its sales force that had been slated for the diabetes drug. In the last five years, Bristol-Myers has reduced its U.S. sales force by 30 percent to 2,800.

Jason Napodano, an analyst at Zacks Independent Research, said he wasn’t surprised by the cost-cutting announcement. Earlier this year, Pfizer and Merck announced their intentions to cut costs. The company won’t have Pargluva sales to help bolster earnings, so it needs to manufacture growth, Napodano said.

In October, the company had forecast 2005 earnings between $1.35 and $1.45 per share. Analysts surveyed by Thomson Financial expect earnings per share of $1.40 in 2005, $1.24 in 2006 and $1.33 in 2007.

Bristol-Myers Squibb shares lost 9 cents to $21.33 Monday on the New York Stock Exchange.