Bristol-Myers Taking Lumps on Inventory

Cutbacks at wholesalers will hurt earnings in coming periods, the company discloses in its annual report.

Author:: Adam Feuerstein
Publish date:: Apr 1, 2002 6:39 PM EST

Bristol-Myers Squibb

can't catch a break.

The big drugmaker disclosed Monday night that its wholesalers have too many drugs sitting on their shelves, and that cutting back on the bloat will take a bite out of future earnings. The company didn't specify how big a chunk the inventory cutbacks would take out of earnings or when they might start hitting the bottom line.

Bristol-Myers has been battered throughout 2002, first by serious delays in its partnership with

Imclone Systems

(IMCL)

to develop the cancer drug Erbitux, and more recently by poor test results for the experimental heart drug Vanlev. The stock, which is nearly 33% below its 52-week high, dropped 9 cents Monday to $40.40.

In its annual 10-K report filed with the

Securities and Exchange Commission

, Bristol-Myers said it believes wholesaler inventory levels for its drugs increased by about four weeks in 2001, primarily because of sales incentives offered by the company. As a result, the company estimates its 2001 domestic pharmaceutical sales included some four weeks of additional sales.

Bristol-Myers says current inventory levels are excessive and will be reduced, and that it "expects this reduction in wholesaler inventories to lower levels will negatively impact its financial results in future periods," according to the annual report.

The company said it expects to offer more financial guidance in April. Analysts expect the company to earn $2.28 a share for 2002, down from $2.41 in 2001, according to Thomson Financial/First Call.