NEW YORK—Bristol-Myers Squibb Co., during a recent meeting with investors, outlined an in-depth review of its business and research and development operations, and also detailed its strategy to improve shareholder value, increase profitability and improve top line growth.
The overview provides investors with insight into how the company intends to implement its strategy and transform the company through its productivity initiative into a next-generation biopharma company that pairs the scale and resources of a mid-sized pharmaceutical company with the entrepreneurial spirit and innovative focus of a biotech startup.
According to the company, the plan focuses on its commercial and scientific units on growth areas, such as specialty and biologic medicines, while providing a framework to enhance productivity and reward entrepreneurship.
During the meeting, senior management detailed the status of the strategic review the company has been conducting over the past several months and explained how it will to continue the company's development into a next-generation biopharma company. The company's vision of a biopharma company is the outgrowth of a process that evaluated the company's four core businesses in great detail: Specialty medicines, cardiovascular and metabolic drugs, mature pharmaceutical brands and the Health Care Group.
During the review, the company reaffirmed several elements of its strategic focus. The company will continue to invest in key growth products, including specialty and biologic medicines and cardiovascular and metabolic drugs. It will also continue to scale back assets in its profitable, though declining, mature brands.
Moreover, the company is currently reviewing a range of strategic alternatives for its ConvaTec and Mead Johnson businesses.
"We remain fully aware of the important contributions these businesses have made to earnings and cash flow, and we will take these factors into full consideration when weighing our strategic options," says James M. Cornelius, chief executive officer, Bristol-Myers Squibb.
As a next-generation biopharma company, Bristol-Myers Squibb seeks to reallocate resources to enable additional strategic acquisitions, such as the recent acquisition of Adnexus Therapeutics, as well as pursue partnerships and other collaborative arrangements. These alliances should add to the company's innovative capabilities, portfolio and pipeline to amplify the company's ongoing focus on growth areas, such as specialty medicines and biologics.
The company also outlined its Productivity Transformation Initiative, the first step to achieve a culture of continuous improvement which was begun earlier this year. Key productivity initiatives include reducing general and administrative operations by simplifying, standardizing and outsourcing, where appropriate, processes and services, rationalizing the company's mature brands portfolio, consolidating its global manufacturing network while eliminating complexity and enhancing profitability, simplifying its geographic footprint and implementing a more efficient go-to-market model.
Some positions have been eliminated in 2007 and the substantial majority of positions will be eliminated in 2008 and 2009.
"It is difficult to see our valued colleagues leave the company, but right-sizing our workforce across all areas is critical to achieving our productivity goals and enhancing the competitive position of the company. While we are reducing headcount in certain functions, we will continue to invest in R&D, biologics and commercialization talent," says Cornelius.
The productivity initiative is expected to generate approximately $1.5 billion in cost reductions and avoidance on a pre-tax basis versus the company's previous strategic plan for 2010.
Officials also outlined progress in transforming the R&D organization into a next-generation biopharma model and offered an update on key late- and early-stage compounds in its pipeline. The company will continue to focus its efforts on serious disease—in both specialty areas and high prevalence illnesses—where there is significant unmet medical need. Senior members of the R&D organization will outline the strategy of building pipelines within products by broadening their clinical use through multiple indications.
The company reiterated its plan to submit saxagliptin for filing with the U.S. Food and Drug Administration in 2008.