Bristol-Myers Squibb

(BMY) - Get Report

has a new headache.

Shares fell 6% Friday after

Medco

(MHS)

set plans to sell a generic version of the company's most popular drug, anticoagulant Plavix. Bristol sells Plavix along with

Sanofi-Aventis

(SNY) - Get Report

of France, which fell 3%.

In a conference call Friday morning, pharmacy benefit manager Medco said it was raising full-year guidance to reflect generic sales of the blockbuster blood-thinner. The news comes as Bristol-Myers faces a government inquiry into a deal that sought to keep generic Plavix off the market for five more years.

Plavix is huge for Bristol-Myers, expected to generate some $8 billion in revenue for the company by 2010 if all goes well. Big drugmakers are particularly hard-pressed to milk their blockbusters because Wall Street sees their new-drug pipelines as dry. But now Medco threatens to upset the Plavix apple cart.

"The Plavix

story is a very big piece of news that was not anticipated," Medco CEO David Snow told investors on Friday. Generic Plavix "is not a final thing, but we are predicting that it will happen." He says the rollout could take place this month.

Bristol-Myers and generic drugmaker Apotex have been fighting over rights to sell the popular blood thinner for months. Bristol-Myers recently agreed to pay Apotex $40 million to delay the generic launch till 2011. But authorities nixed the arrangement because of possible antitrust violations. The companies now face a criminal probe as a result of those negotiations.

With the proposed settlement dead -- and the two parties set to fight their battle in court -- analysts had assumed that Plavix would remain free of competition for some time.

"BMY could return to the negotiating table to attempt to structure an agreement more palatable to regulators, although at this point, we believe that the courtroom could be more likely," Friedman Billings Ramsey analyst David Moskowitz wrote earlier this week. And "we estimate that a judicial verdict could be one or two years away, due to the complexity of the case."

Moreover, Moskowitz noted,

Forest

(FRX)

won a similar case this year. If Bristol-Myers follows suit, the company could force Apotex to pay it three times the amount of sales it lost as a result of generic Plavix.

Still, Moskowitz believes that investors have been bracing for the worst and valuing the stock accordingly. Meanwhile, Moskowitz himself has already looked past Plavix to the possibility of other big things to come.

"In our view, the company has one of the most exciting pipelines in the major pharmaceutical sector, with a number of innovative and potentially commercially important drugs," Moskowitz wrote in a follow-up report on Friday. "Even if the company were to lose Plavix litigation -- which we believe is unlikely -- the company's attractive growth profile (over 30% growth in 2009 and 2010 ex-Plavix) could justify at least a 20 price-to-earnings multiple on the remaining earnings, supporting a $24 price floor on the shares."

Given that outlook, Moskowitz has an outperform rating and a $28 price target on Bristol-Myers' stock. His firm seeks to do business with the companies it covers.

Shares of Bristol-Myers fell $1.40 to $22.39 in heavy trading Friday.