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Bristol-Myers Squibb's first-quarter earnings plunged 45 percent on generic competition for its drugs, but surprisingly low taxes enabled the company to meet Wall Street's forecast.
The company said on Thursday that it earned $609 million, or 37 cents per share, compared with $1.1 billion, or 64 cents per share, a year earlier.
Excluding special items, Bristol-Myers earned 41 cents per share, matching the analysts' average forecast, according to Thomson Reuters I/B/E/S.
The company's effective tax rate fell to 11 percent from 26.7 percent a year earlier, due to a new federal credit for research and development. Wall Street had been expecting a tax rate in the 15 percent range.
Bristol-Myers said it still expected full-year earnings of $1.78 to $1.88 per share, which would be a decline of up to 11 percent from 2012.
Sales plunged 27 percent to $3.83 billion, slightly below Wall Street expectations of $3.88 billion, as the company's Avapro blood pressure drug and Plavix blood clot preventer faced competition from cheaper generics. Plavix had been the world's second-biggest-selling medicine before losing U.S. patent protection last May.
Plavix sales dropped 95 percent to $91 million in the quarter, while Avapro's fell 78 percent to $46 million.
But most of the company's newer drugs showed strong growth. Sales of melanoma treatment Yervoy jumped 49 percent to $229 million, while sales of leukemia drug Sprycel rose 24 percent to $287 million.
Combined sales of diabetes drugs Onglyza and Kombiglyze increased 25 percent to $202 million, while sales of rheumatoid arthritis medicine Orencia rose 26 percent to $320 million.
Analysts expect Bristol-Myers' earnings to rebound next year, growing by a mid-teen percentage rate, as the Avapro and Plavix declines level off and newer drugs continue to grow.
Investors have especially high hopes for Eliquis, a blood clot preventer approved in December to prevent strokes among patients with an irregular heartbeat called atrial fibrillation. They expect the pill, developed in partnership with Pfizer Inc (PFE.N), to become a preferred alternative to the standard treatment, warfarin, and to generate annual sales of more than $3 billion.
Eliquis had U.S. sales of $17 million in the quarter, below the $36 million that Wall Street expected, ISI Group analyst Mark Schoenebaum said. "But it's very early days, and we think the company will get a pass for another quarter or two," giving sales representatives more time to drive up sales.
Bristol-Myers is developing a slate of other potentially lucrative drugs, including treatments for hepatitis C and various forms of cancer. One cancer drug, which blocks a protein called PD-1, could claim the spotlight next month at a major cancer meeting in Chicago.
But other experimental drugs have recently fallen by the wayside. U.S. regulators rejected dapaglifozin, a new type of treatment for type 2 diabetes, early last year due to safety concerns. Six months later, its brivanib drug failed in a late-stage trial to prolong survival in liver cancer patients.
Bristol-Myers pulled the plug last August on another treatment for hepatitis C after a patient died of heart failure in a mid-stage trial. The company, with a charge of $1.8 billion in the 2012 third quarter, wrote off the once-promising drug.
Shares of Bristol-Myers were down 1.7 percent at $40.75 in trading before the market opened.
(Reporting by Ransdell Pierson; Editing by Gerald E. McCormick and Lisa Von Ahn)