2006 Annual Report

Their will. OurTogether medicines. we can prevail. 2006 Annual Report NOPQ Bristol-Myers Squibb’s MissionOur company’s mission is to extend and enhance human life by providing the highest-quality pharmaceutical and related health care products. We pledge—to our patients and customers, to our employees and partners, to our shareholders and neighbors, and to the world we serve—to act on our belief that the priceless ingredient of every product is the honor and integrity of its maker. ON THE COVER: At Bristol-Myers Squibb, we develop medicines and related health care products to help people live full and active lives.A few of our patients and customers are pictured on the cover.These and other patients are profiled in our Special Report, beginning on page 7. To Our Stockholders 2006 was a challenging transitional year for Bristol-Myers Squibb. We experienced the significant negative impact of generic competition in our pharmaceutical business, and made the difficult decision to change leadership of the company.We also achieved preliminary settlement of an investigation of drug pricing, sales and marketing practices that began many years ago. At the same time, we were successful in launching several promising new products, expanding key businesses and advancing our robust pipeline—all in areas of serious unmet medical need. As a result, Bristol-Myers Squibb is now well positioned to begin growing sales and earnings, and to build shareholder value. FINANCIAL PERFORMANCE In 2006, the company’s net earnings from Sales and earnings were adversely affected In August 2006, the Canadian pharmaceutical continuing operations on a GAAP (Generally by several developments in the year. First, as company Apotex launched its generic version Accepted Accounting Principles) basis were expected, we lost exclusivity on Pravachol, our of Plavix in the U.S., flooding the market for $1.6 billion, or $0.81 per diluted share, from net cholesterol-lowering medicine, in the U.S. and several weeks until sales were halted by a sales from continuing operations of $17.9 billion. in several European countries. For many years, court order.This action by Apotex reduced This compares to earnings of $3.0 billion, or Pravachol was one of our leading products. our Plavix sales in the range of $1.2 billion to $1.52 per diluted share, on sales of $19.2 billion More recently, we experienced the negative $1.4 billion in 2006, and was reflected in an in 2005. On a non-GAAP basis, excluding impact of generic competition with our top- overall 15 percent decline in Plavix sales for specified items, net earnings from continuing selling product Plavix (clopidogrel bisulfate), an the year.We expect the generic supply in operations in 2006 were $2.1 billion, or antiplatelet medicine that Bristol-Myers Squibb the market will have a residual impact on $1.09 per diluted share, compared to $2.8 and sanofi-aventis (Sanofi) are codeveloping 2007 Plavix sales. billion, or $1.43 per diluted share, in 2005. and co-commercializing around the world. 2006 Annual Report Bristol-Myers Squibb 1 PLAVIX SITUATION Several years ago, Apotex filed a request with Clearly, our Plavix business—and the com- Sprycel and Orencia came from our own the U.S. Food and Drug Administration (FDA) pany’s financial strength and reputation—were laboratories, and we continue to invest in to sell its generic clopidogrel product in the seriously damaged by this turn of events. It extensive clinical programs exploring a range U.S., despite the existence of patents on Plavix was a major setback that we sincerely regret. of potential uses for these promising medicines held by Sanofi and Bristol-Myers Squibb in the Bristol-Myers Squibb and Sanofi had entered to help even more patients in the future.We U.S. and other countries. Believing our patents into negotiations with Apotex in good faith to are pursuing this “pipeline within a product” to be valid and infringed, we sued Apotex to pursue a workable solution benefiting all parties. approach with other key products as well. protect our valuable intellectual property rights. The Plavix patent trial concluded on In addition to these launches, we expanded Bristol-Myers Squibb and Sanofi had invested February 15 of this year, and the court is the reach of our other newer pharmaceuticals: extensively in Plavix over more than a decade expected to rule in the next few months. • Erbitux, a cancer treatment that we are to conduct clinical research demonstrating its We are hopeful that the validity of our intel- codeveloping and copromoting with benefits to patients. lectual property rights will be upheld. In the ImClone Systems Incorporated, continues Because of the way U.S. law in this area meantime, we are encouraged that demand to grow as a treatment for both advanced is structured, Apotex was able to apply for for Plavix continues to grow, pointing to a refractory colorectal cancer and, more and receive permission to market its generic positive future for this therapy in helping even recently, head and neck cancer. clopidogrel in the U.S., even though the dispute more patients. And we continue to invest • Abilify, an antipsychotic therapy that we over the validity of the Plavix patent had not behind the brand. are codeveloping and copromoting with yet been settled. In early 2006, the FDA Otsuka Pharmaceutical Co., Ltd., is benefiting approved Apotex’s request, enabling that PRODUCT HIGHLIGHTS from additional formulations that were company to launch its generic product in the In 2006, we launched several noteworthy approved in 2006. U.S., although this action could put it at risk pharmaceutical products: • Baraclude, a treatment for chronic hepatitis B, of legal sanctions. • Orencia is a promising new treatment continues to gain share, including in Asia With these concerns in mind, the parties option for many patients suffering from where the disease is widespread.We currently to the dispute entered into discussions and in rheumatoid arthritis, a disfiguring and are launching Baraclude in Japan as well as March 2006 announced a tentative settlement disabling disease that can erode quality in Europe. of the patent infringement litigation. However, of life and shorten lifespan. Orencia is • The FDA approved a 300 mg single capsule the government did not approve the proposed gaining share in the U.S., and we expect formulation of Reyataz in combination settlement, and in July we announced that the to launch it in Europe later this year. therapy for adults with HIV-1. patent infringement litigation would resume. • Sprycel addresses a serious and often deadly In 2006, all of our key pharmaceuticals— Shortly thereafter, Apotex launched its generic form of chronic myelogenous leukemia in with the exception of Plavix—grew at solid clopidogrel in the U.S.We responded by seeking patients who are resistant to or intolerant double-digit rates. Several additional products a preliminary injunction from a Federal court to of Gleevec, the current standard of care. approached or surpassed the $1 billion mark in halt its further distribution.The court granted Sprycel is currently being marketed in the U.S. total revenue or sales including: Abilify, Reyataz the preliminary injunction on August 31, and and recently has been launched in Europe. and—in our Mead Johnson Nutritionals busi- it remains in force. • Atripla is a one-tablet, once-daily combination ness—the Enfamil infant formula line. of our Sustiva medicine and a treatment Mead Johnson and our other related health from Gilead Sciences. Atripla joins Sustiva care companies—ConvaTec and Bristol-Myers and Reyataz in our growing portfolio of Squibb Medical Imaging—continue to provide innovative therapies for HIV/AIDS. strength and stability for the company, partic- • EMSAM, licensed from Somerset Pharma- ularly in this transitional time for our pharmaceuticals, is a transdermal patch that was ceutical portfolio. Many of our key health care introduced in the U.S. for treatment of brands have solid additional growth potential, serious depression in adults. including Mead Johnson in Asia and Latin America, where market expansion is robust. 2 Bristol-Myers Squibb 2006 Annual Report JAMES D. ROBINSON III Chairman of the Board (left) and JAMES M. CORNELIUS Chief Executive Officer PIPELINE ACHIEVEMENTS Our pipeline continued to move forward in 2006. In addition to the new drug launches already mentioned, we transitioned one com- pound—apixaban, potentially for deep vein thrombosis—to late-stage (Phase III) development.We now have six compounds in Phase III, all addressing areas of significant unmet medical need.Three of those six—ixabepilone, vinflunine and ipilimumab—are in oncology, an area of historical strength for Bristol-Myers Squibb. Our pipeline productivity is tied to several factors. First, we have consistently increased our investments in research and development, even during the past five years, when exclusivity losses drained substantial sums from our revenue base. Second, we restructured and refocused our R&D organization to improve GROWING IMPORTANCE ORGANIZATIONAL CHANGES processes, enhance quality of drug candidates OF BIOLOGICS The company made several leadership and increase efficiency in clinical development. In the fight against serious disease, biologics— changes in 2006. In September, we announced Finally, in this era of cost and pricing pressures protein-derived therapies—are playing an the departure of Peter R. Dolan as chief on our industry, we believe it is critically impor- increasingly prominent role. Erbitux and Orencia executive officer and the appointment of tant to strategically manage our pipeline to are biologics, as are ipilimumab, for cancer, and James M. Cornelius, a member of the Board of ensure efficient use of resources and effectively belatacept, for solid organ transplant rejection, Directors, as CEO on an interim basis. Peter manage risk and uncertainty.To that end, in our pipeline.

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