施貴寶 (BMY) 2003 Q1 法說會逐字稿

Good day and welcome to today's Bristol-Myers Squibb Company first quarter sales and earnings conference call.

Today's call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. John Elicker.

Please go ahead, sir.

Good morning, everyone, and thanks for joining us this morning as we're going to review our first quarter 2003 results.

The press release and supporting financial data are posted on our BMS IR Web site.

With us today, we have Peter Dolan, our Chairman and CEO, Andrew Bonfield, our CFO, and James Palmer, the new head of our Research and Development Group.

Let me take care of some -- before we go to comments, let me take care of some legal business.

During the call, we may make various remarks about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's most recent annual report on form 10-K, and in our periodic reports on form 10-Q.

These documents are available from the SEC, the BMS website, or from BMS Investor Relations.

In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date.

While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

With that, let me turn it over to Peter Dolan.

OK.

Thank you, John, and good morning, everybody.

There are a few points that I want to make this morning before I turn the meeting over to Andrew and introduce James Palmer to you.

First, today's first quarter earnings announcements are a reaffirmation of 2003 guidance, and this quarterly conference call, as per our regular schedule, all move us toward what I see as a business-as-usual period for the company.

We have been working for over a year to get the company back on track, to deal with our challenges and to have positive news about accomplishments, not be overshadowed by inventory work-down or the process of working through some of our issues.

And it's been about six months -- at least six months -- since we've been able to report in a timely way on the quarter's results.

It's been a challenging time for me, and I know frustrating for you.

Today we're back to our normal reporting cycle, when we can focus, once again, on communicating and talking about performance and results, and that's what we're gonna be talking about with you today.

The second point I want to make is I feel good about 2003 and how the business is performing versus our expectations.

We put in place a good plan for '03, and we're executing against that plan.

I'm also pleased -- and you'll hear from James -- with how our pipeline is advancing and the fact that there are a number of near-term milestone opportunities for us to meet in the next few months.

The third point I want to make is I know there's a lot of interest beyond 2003.

Let me just say that we're hard at work on our plans for the next few years, which require us to manage through some additional exclusivity losses on important products.

But, with a new product just being launched in the U.S., subsequent global roll-out, other new products to be launched and significant upside on assets, like Plavix, for example, we'll have some investment choices to make.

We have a lot of work still to do, but as our plan begins to take shape, we'll have more to say as the year progresses.

Let me elaborate more on my first two points.

As each month goes by, we continue to put many of our immediate challenges behind us; inventory work-down, patent litigation settlements on BuSpar and TAXOL, and the completion of our restatement were all timed and attention-consuming distraction that had an impact on the company's financials and the productivity of our people.

We tackled each and every one of the challenges with an objective of putting them behind us as quickly as possible.

We're making good progress, and when appropriate, we're moving on.

Another challenge and opportunity for the company was to put the right team of leaders in place.

Two of those leaders are with me today on the call.

In addition to our CFO, Andrew Bonfield, you'll hear from our new Chief Scientific Officer, Dr. James Palmer, who has now completed his first full quarter with the company.

The three of us and the other leaders of the company are very focused on advancing our pipeline, on growing our key global brands, geographies and businesses, and further developing a detailed plan post 2003.

At the same time, we fully understand how important it is to execute and deliver against our plan in 2003.

With about a third of the year behind us, we do feel good about '03 and our full-year earnings per share guidance of 1.60 to 1.65.

We're off to a solid start this year.

I want to mention one of our new products, Abilify, our new treatment for schizophrenia, that's performing well and we think it has great possibilities going forward.

Abilify, as you know, came on the market at the end of last year, and in about five months, has taken approximately four percent of the weekly new RX market share in the anti-psychotics class.

We're certainly pleased with its progress, which is tracking on or ahead of our plans.

And then, looking ahead, we're significantly increasing our U.S. sales force support behind Abilify and planning for a global roll-out, and we're proceeding with the clinical plans we have to complete additional trials to maximize its potential.

We had continued strong performance from our international business with sales up 15 percent -- yes, in part, due to generally favorable foreign exchange.

Many of our global RX franchises had excellent first quarter growth, and among our other healthcare business, medical imaging had a particularly strong quarter.

Growing these key brands, our geographies, and our business across our portfolio is clearly key to our success, and it continues to be our top priority.

Now, we plan to increase A&P spend, marketing and selling costs behind our in-line growth products and our new product launches this year, and, in fact, both areas, as you see, were up significantly in the first quarter, with A&P up 41 percent, and marketing and selling up 13 percent.

These numbers are off our relatively low base a year ago, but we planned in increases in '03, and we view it as an investment in our current business that'll pay dividends in subsequent quarters, as well.

Andrew is going to talk more about the first quarter performance, and following Andrew, James Palmer will discuss the R&D model we have that puts greater emphasis on spending behind our maturing pipeline, as well as a regulatory review of our near-term prospects.

And among those prospects, as I said earlier, we have some very good opportunities with near-term milestones that you'll hear more about.

Let me turn it over to Andrew and James.

Thank you, Peter, and good morning, everybody.

I'll jump right into a review of our first quarter's results.

As you have seen in our press release, fully-diluted earnings per share for the first quarter were 39 cents per share -- a penny ahead of FirstCall consensus.

Despite the difficult year-over-year comparison with Q1 2002, due, in part, to the fact that we did Glucophage IR exclusivity for some of that quarter, sales during the first quarter of 4.7 billion were level with those of 2002.

The sales performance was altered from a three-percent increase due to changes in selling prices, a three-percent increase due to foreign exchange rate fluctuations, and a five-percent decline in volume.

Global sales of our key brands were strong, with Pravachol up 13 percent, Avapro up 26 percent, Paraplatin up 29 percent, and Sustiva up 18 percent.

These growth rates include the positive impact of foreign exchange.

As Peter said, the Abilify launch continues to go well with 140,000 prescriptions in Q1 and a four percent new RX share in just five months.

Again, from a sales perspective, the first quarter was the most difficult year-over-year comparison to 2002, and we expect to report positive sales growth for the remaining quarters of 2003.

Sales in the U.S. pharmaceutical business declined five percent from $2.5 billion to $2.4 billion.

The decline is primarily attributable to lower Plavix sales and the continued impact of the loss of exclusivity for TAXOL and Glucophage IR in the U.S.

While U.S. prescription demand for Plavix was up 30 percent, U.S. sales of Plavix declined 18 percent to $335 million.

This reported sales figure differs from the number reported by Sinochi (ph) last week, as it includes sales previously recorded as deferred revenue.

The decline in the sales of Plavix results from: firstly, there was de-stocking by wholesalers in the quarter following the January, 2003 price increase.

We estimate that wholesale inventory levels for Plavix at the end of 2002 were approximately one and a half months, and that inventory levels were down below a month at the end of the first quarter of 2003.

Secondly, the inventory work-down for Plavix did not begin until after the first quarter of 2002, so the first quarter year-on-year comparison is not completely comparable.

Finally, we do expect that given continued strong prescription demand and fluctuations in wholesale [Inaudible] , full-year 2003 reported sales of Plavix will largely be in line with overall prescription growth.

Looking at prescription demand, key products in the U.S. pharmaceutical business, like Abilify and Plavix, Avapro and Sustiva, performed at or above expectations.

As I mentioned earlier, Abilify has a four percent URX share.

U.S. prescription growth for Plavix was up 30 percent, Avapro/Avalide was up 15 percent and Sustiva was up 20 percent.

Reported sales in the first quarter include $255 million previously recorded as deferred revenue.

We expect to record the remaining deferred revenue, excluding that related to the OTM business, over the course of 2003.

The product detail of the deferred revenue recorded as sales in the first quarter is available on our website.

You can see that several products in both our U.S. primary business and the oncology/virology business were affected.

International pharmaceutical sales grew strongly and were up 13 percent.

Of this, foreign exchange contributed to a 10-percent gain.

Pharmaceutical sales in Europe increased by 14 percent, down two percent net of foreign exchange, supported by strong growth in Pravachol, which was up 30 percent, or 11 percent net of foreign exchange.

Pharmaceutical sales in Japan increased by 20 percent, or eight percent excluding foreign exchange, with TAXOL growth the highlight here.

In Latin America, total sales were strong -- up seven percent -- but were negatively impacted by FX.

In total, including the impact of exclusivity losses, sales in our worldwide pharmaceuticals business were level at $3.7 billion.

Moving to our other businesses, nutritional sales were down four percent on sales of $433 million.

Mead Johnson continues to be the market leader in the U.S. infant formula market.

ConvaTec sales increased by one percent to $177 million, down seven percent excluding FX , with new products expected to have a positive impact.

Medical imaging grew 13 percent to $119 million in sales, with continued strong growth in the flagship brand, Cardiolite.

Now, let me move on to some of the expense lines in the P&L.

Gross margins declined to 64.2 percent, compared to 67.8 percent in the first quarter of 2002, principally as a result of lower sales of our high-margin products, Serzone and Glucophage, which reduced the gross margin by approximately .8 percent; continued high sales growth of our lower-margin oncology distribution business, OTN, which also had a negative impact of around one and a half percent; lower margins in our non-medicines businesses, which had a negative impact of about .8 percent; and a portion of the manufacturing nationalization charges, which had an impact of approximately .2 percent.

Consistent with my comments regarding sales for the remainder of the year, we expect gross margins for the remaining quarters of 2003 to be at or slightly above first quarter 2003 gross margins.

Marketing, selling and administrative expenses increased by 13 percent to just over one billion dollars, primarily by a nine percent increase in sales force expenses, and a 20 percent increase in marketing expenses.

This is off the low base in 2002, but we do continue to expect setting the marketing expenses to finish the year slightly ahead of 2002 levels.

Advertising and promotion increased by 41 percent to $364 million, as we have increased the level of support for key in-line and new growth products.

Again, this is off the low base and we expect A&P to finish the year in mid to high teens, ahead of 2002 levels.

Both of these expense items demonstrate our continued investment and support of the launch of Abilify, and increased support of our key brands.

R&D expense decreased five percent, primarily based on the closure of the Discovery facility in Wilmington, and the timing of certain development programs.

We continue to expect R&D expense for the year to be roughly the same as 2002.

Other income and expense in the first quarter was an expense of $77 million, compared to an expense of $39 million in 2002.

This was driven, in part, by an increase in pension and medical expenses.

Minority interest expense net of taxes was $20 million, compared to $53 million in the first quarter of 2002, primarily as a result of a decrease in U.S. sales of Plavix, combined with an increase in European sales of Plavix and Avapro.

The company recorded 26 million in charges relating to the rationalization of manufacturing facilities.

The total cost of these rationalization activities is expected to be approximately $34 million for the year.

You will notice from the release that $10 million of these charges have been reflected in cost of goods sold.

Offsetting the $26-million charge in Q1, the company recorded $21 million in income from the settlement of an antitrust litigation involving vitamin manufacturers.

Therefore, there was no net impact from non-comparable items on fully-diluted earnings per share for the quarter.

The effective tax rate in Q1, 2003, of 27.3 percent was basically constant with the rate in Q1 of 2002 of 27.1 percent.

As you have noticed from our press release, we now present a tax rate on earnings before minority interest expense, which has the net effect of increasing the effective tax rate compared to the prior presentation.

We expect the tax rate for 2003 to be approximately the same as the first quarter.

This is lower than the 2002 full-year effective rate, which is driven by the full-year of production in our off-shore plants, which will benefit the overall rate.

To summarize, prescription trends for key products was strong.

Our sales force and A&P spending demonstrates a commitment to supporting the successful launch of Abilify, as well as continued support of our key growth drivers.

For the first quarter of 2003, we delivered earnings per share of 39 cents.

Now, let me hand it over to James.

Thank you, Andrew, and good morning, everyone.

In the next five minutes or so, I'd like to cover two items: firstly, to give you a brief overview of our pipeline strategy, and secondly, to update you on upcoming key events and some of the important drivers of our pipeline.

Since coming to Bristol-Myers Squibb nearly five months ago, one of the critical things I've been focusing on is ensuring a strategy is in place to deliver the value of our pipeline, both in the near and long-term.

We've now developed and are implementing a four-part strategy.

Firstly, in discovery, we've reallocated our resources and realigned the number of programs we're working on.

We're now focusing on selected diseases within our core therapeutic areas.

In supporting this more-focused discovery portfolio, we've committed substantial increases in resources to these programs, such that we will be among the industry leaders in the number of chemist and biologists per program.

Secondly, we're increasing our investment in our late-stage portfolio and lifecycle management priorities.

It's a top priority for the company to bring our promising late-stage compounds to market, and also to fully support these products through their lifecycles.

Thirdly, we must increase our success rate in all phases of development.

We have a number of initiatives in place, which we believe will begin to address this issue.

But fundamentally, long-term success will be driven by an increased output of quality molecules from our rationalized and focused discovery efforts.

Fourthly and lastly, we'll continue to compliment our portfolio within licensed compounds.

We're committed to in-house discovery, but in-licensing will remain a key component of our portfolio strategy.

And as you know, Tamar Housen (ph) is leading these efforts and we work extremely closely with Tamar (ph) and her group to ensure success in this area.

Now, let me move on to the pipeline; firstly, Abilify.

As you know, Abilify was approved for the treatment of schizophrenia in November, 2002.

This approval was based on a number of short-term, four to six week dosing duration clinical studies.

As we announced earlier in the year, we filed an SNDA for the long-term treatment of schizophrenia, and at the upcoming American Psychiatric Association meeting, we will be presenting new data on bipolar mania.

And we expect to file an SNDA for this indication in the next few months.

Secondly, Atazanavir.

This has got the potential to be the best in class protease inhibitor for HIV and AIDS.

We filed the NDA for Atazanavir in December.

It's going to be reviewed by the advisory committee on May the 13th, and if approved, Atazanavir has several potential differentiators.

It's the first once-daily protease inhibitor; it has a very competitive resistance profile and is well-tolerated, and importantly, has a favorable lipid profile and doesn't seem to demonstrate the increases in cholesterol seen with long-term treatment with current protease inhibitors.

Thirdly, Erbitux.

In February, Bristol-Myers Squibb and ImClone initiated a limited-access program for patients with refractory metastatic colorectal cancer.

Mert KGA (ph) will be presenting important data on Erbitux at ASCO at the beginning of June.

We hope to make a filing decision on Erbitux during this year, and in the meantime, we're commencing large, randomized trials in earlier-stage metastatic colorectal cancer.

These three projects are part of an important pipeline of full-development programs in late phase two and phase three.

In addition to the programs I've discussed, I'd also like to mention Entecavir, CTLA4-Ig, LEA29Y and our Dual PPAR Agonist, and also, Epothilone for cancer.

Entecavir is in phase three for the treatment of hepatitis B. We'll be reporting clinical data during 2003, and expect to file in 2004.

CTLA4-Ig is a novel first-in-class treatment for rheumatoid arthritis.

We presented phase two data last year.

Phase three is underway, and we're planning to file in 2004.

The systa (ph) compound, LEA29Y, for the prevention of organ transplant rejection, in completing phase two.

Also, we've recently completed phase two for two important projects: firstly, our Dual PPAR Agonist for diabetes, and secondly, the Epothilone for cancer.

Both of these are now moving to phase three.

In addition, we'll be presenting data on the Epothilone at the upcoming ASCO meeting.

Now, earlier in our pipeline, we have approximately 20 projects in phase one and early phase two.

These are being dosed in humans, or actually in-patients in their potential target indication.

This phase includes projects such as the Factor 10a inhibitor for anticoagulation, and the CRF1 Antagonist for depression and anxiety.

Also, we have other compounds being studies in important new targets in HIV, oncology and diabetes.

So, in closing, we're on track for this year.

We have some important milestones coming up in the second quarter.

One of the reasons I joined the company was the pipeline, and I personally remain very excited about the potential of the portfolio, and look forward very much to updating you during the rest of the year.

Now, I'd like to turn things back over to Peter.

Thanks, James.

I want to summarize quickly where things stand from our perspective.

In 2002, we worked on getting the company and all of its businesses back on the right track, put a new leadership team in place, had a very important new product launch with Abilify, and built a solid base of performance on several of our key products.

This year, we're on the path toward delivering against an aggressive, realistic and achievable plan that appropriately invests in our business growth opportunities.

And in 2004 and beyond, we are planning for the full impact of our significant upcoming exclusivity losses, while we look to continue to fully invest in our opportunities and to launch several new products.

I think we'll turn it now, John, to take your questions.

Thanks, Peter.

And, Mike, we're ready to go to Q&A.

Thank you, sir.

The question and answer session will be conducted electronically.

If you would like to ask a question, you may do so by firmly pressing the star key, followed by the digit one on your telephone keypad.

In order that we can reach as many questioners as possible, we ask that you limit yourself to one question.

Once again, we ask that you limit yourself to one question, and to ask a question today, please press star, one on your telephone keypad.

And we'll take our first question from Stephen Scala with SG Cowen.

Oh, thank you very much.

On the March 10th call, a number of points of guidance were offered, most of which were reiterated today.

But I'm wondering if you would like to give us a forecast for your top-line for the full year with respect to either growth year-over-year, or an absolute number.

Yeah, Steve, we've deliberately avoided, as you know, giving a top-line guidance, and we're not going to.

We expect the top-line to grow in line with prescription chains as we go through the year, but you will see a lot stronger growth as we go through the remainder of this year.

Thanks, Steve.

Mike, can we go to the next call?

We'll take our next question from Jami Rubin with Morgan Stanley.

Thank you.

Andrew, a question for you, first.

Glucophage XR and Glucovance were quite stronger than expected, especially relative to the fourth quarter.

I'm just wondering if there was any sort of unusual stocking there.

And also, if you could talk about the timing of when you would anticipate generic competition for those brands, which, I believe, lose exclusivity this year.

And thirdly, a question to James.

You didn't mention Desquinlone (ph) or Vanlev; if you could just bring us up to date on those two compounds.

Thanks.

Jami, it's James here.

Let me go first.

Desquinlone (ph) -- as you know, we moved the filing decision back from '02 to '03.

That remains the case.

We will make a filing decision in '03.

And we've been in discussion with the agency on the compound and we will decide on filing strategy during this year.

Secondly, Vanlev -- as you know, we have an approvable letter for hypertension from the agency for Vanlev.

We are in discussion with the agency about how we can get to approval with the drug, and we'll be making some key decisions about that during this year.

Jami, on your question around about Glucovance and Gluco XR, the sales growth of 54 percent is ahead of the prescription trend growth of eight percent.

That's primarily due to year-on-year comparisons distorted by the de-stocking, which did occur in those two brands in the first quarter of 2002, so that's the main reason.

As regards exclusivity losses, John will ...

Yeah.

Jami, on XR, we love exclusivity -- I think it's in October of this year, and we're planning for a generic entry during the fourth quarter.

And on Glucovance, we're hopeful for a pediatric extension.

As soon as we find out whether we've been awarded that we'll let everybody know.

Thanks, Mike.

Can we go to the next question?

Moving on, we'll hear from Carl Seiden with JP Morgan.

Thank you very much.

A couple of question of really product development questions, if I could.

James, you talked about in-licensing as an important part of the strategy.

I guess Bristol, even prior to your joining -- maybe a year, a year and a half ago -- had a significant kind of revitalization of the in-licensing effort.

And I'm just wondering if you can characterize how that's gone in shape and anyway (ph) what investor expectations should be from in-licensing going forward.

And, you know, maybe broadly, just if you have a sense, for what proportion of your growth going forward do you expect to come from in-licensing.

And separately, if I could, James, you talked about a revitalized focus on discovery.

Can you tell us what therapeutic or disease areas you're focusing on, and which ones you've decided to cut?

Thanks.

Let me take the second question first and just talk a little bit about discovery.

What we've done in discovery is we've focused on six disease areas, and they're actually by site.

So, in Lawrenceville near Princeton, we have oncology and immunology.

In Hopewell, we have cardiovascular and metabolic.

And then, Wallingford in Connecticut, we have neuroscience and infectious diseases.

Within those programs, we're focusing on really diseases in which we have core capabilities.

As I said, also, we've rationalized and reduced the number of program, and also, we've increased our chemistry and biology resources substantially on each program.

And the rationale for that, simple, is that I personally believe that good molecules ultimately come out of strong chemistry and strong biology.

That's why we've invested in that.

So, those will be our core disease areas going forward.

And, you know, I think this -- as I say, to the company, this is the sort of bet on discovery productivity.

I'm confident we're gonna deliver it.

For the in-licensing question, let me turn it back to Peter, first.

Just to make a couple of points on your excellent development question, Carl.

The first point I'd make is longer-term, we're clearly looking to have roughly two thirds of our future revenue growth come from our internal efforts, and about one third come from outside the company.

As you know, that's a significant shift from our history, where we've had great success partnering products and doing external licensing deals, and it's very much a part of our heritage.

No question that external development and licensing has become more competitive.

We are actively involved in a number of discussions at -- we review these opportunities on a regular basis and Tamar Housen (ph) and her group have been very active in advancing a number of different opportunities for us to evaluate.

Thanks, Carl.

Mike, can we go to the next question?

Certainly, sir.

We'll go to David Risinger with Merrill Lynch.

Thank you very much.

I have a question on patents.

Could you frame for us the TAXOL patent expirations in Europe; when they will occur, the magnitude of the impact on non-U.S.

TAXOL sales?

And could you also comment on the Cardiolite patent expiration that's forthcoming?

Thank you.

On TAXOL in Europe, we are anticipating a loss of exclusivity in the fall of '03.

It will continue to have exclusivity in other markets around the world, but the biggest impact for TAXOL will be in the roughly October timeframe of this year.

Thanks.

And Cardiolite, David -- you and I can have a conversation afterwards, but I think Cardiolite -- there's no immediate short-term patent issues with Cardiolite, as I understand it.

Thanks.

Mike, can we go to the next question, please?

I will now go to Sanford Bernstein and Richard Evans.

Hi.

Thanks for taking the question.

It's regarding the Dual Action PPAR.

Should we anticipate seeing any data on that at the ADA in June, first of all?

And second of all, could you characterize, to any degree, what we should expect from a phase three program in terms of single-agent use, combination use, and if combination, what the other parts of the regimen might be?

Yeah, we are going out in '03 with data on the Dual PPAR.

I can't figure -- we will come back to you -- but I can't tell you whether we have actually made the ADA abstract deadline or not, and I'll follow up on that.

In regards to profile, what we would be looking for, obviously, is -- you know, the benchmarks out there are Avandia and Actarse (ph) .

With the Dual Agonist, what we'd be looking for is at least equivalent glycemic control.

We would like to see some lipid benefit, and we'd also like to see, hopefully, a better risk profile in terms of; obviously, a prerequisite is it's clean on the liver.

But we'd also like to see less edema and resolve the cardiovascular events.

Obviously, as we're moving from phase two to three, we're quite confident about the profile of the compound to date.

And, know, I'm quite excited about the asset as it moves forward.

Thanks, Richard.

Mike, can we go to the next call, please?

We'll go to Jim Kelly with Goldman Sachs.

Thank you very much.

I just had a question about the consignment sales amounts.

Were the consignment sales for any of the given products at the same gross margin as the -- we'll call it regular sales, or sort of normal business sales?

And I also wanted to make sure that the demand for a given product I should be -- if I want to see what the real demand is, I should be adjusting the number -- the sales in the U.S. for that product by those amounts given in some of the supplemental disclosure that you gave us.

Thanks.

Jim, it's Andrew.

As regards to consignment sales, they would be recorded at the normal gross margin.

If you look at the number -- the number we have on the website as $296 million -- that reduces to net sales of $255 million.

The 41 million difference is the gross to net adjustment.

Otherwise, it's purely the normal gross margin of those products.

As regards to the second part -- does that impact any of the trends?

If you look at the reported sales growth numbers that we've given you in the release and relate those to prescription trends, those are the direct comparison.

There will be differences, because, as you will recall in the first quarter of last year, we may have had sales either stocking or de-stocking within wholesaler to outside the consignment sales model.

And that does cause some of the distortion, vis-à-vis what happened with Glucovance and Gluco XR.

So, apart from that, there should actually be no other distortions, but that is really the difference.

As we come through to the end of the first quarter, we have seen no wholesaler buy-in of any individual product.

We see no unusual activity as regards stocking in the first quarter.

In fact, at the end of the first quarter, we believe we're at normal inventory levels, apart from Plavix, where we believe we're actually at relatively low levels below a month.

Thanks, Jim.

Mike, can we go to the next question, please?

We'll go to Barbara Ryan with Deutsche Bank.

Yeah, just following up on that -- and thank you for taking my call -- you specifically went through the inventory issues on Plavix, and obviously talked about the year-over-year comparison.

And I wonder if you can just do the same for Pravachol.

And then, on Abilify -- the 37 million in the quarter -- A, I'm assuming that's 65 percent or roughly of the total sales that you're recognizing, and B, if you could tell us how much of that was the initial stocking.

Thank you.

Yes, the $37 million of Abilify is on an alliance revenue number, so that would be 65 percent.

Most of the stocking, as you would have expected, actually occurred in last year, Barbara, when the buy-in would have occurred before launch.

As regards Pravachol, if you look at Pravachol script trends, Pravachol script trend was flat, year-on-year.

U.S. sales of Pravachol were actually up around three percent; most of that difference is just due to price.

Thanks, Barbara.

Mike, can we take the next question, please?

Moving on, we'll go to Tim Anderson with Prudential Securities.

Hi.

A couple of questions.

If I look at volume trends, excluding foreign exchange, on almost all your product lines, except for medical imaging, they were down.

And I'm wondering if these trends likely continue throughout '03, and are you still planning some key product lines, like nutrition and like ConvaTec?

The second question is, you know, should we assume that you have a lifecycle management strategy for Pravachol ahead of the '06 patent expiration?

Let me respond to the portfolio question, first;

Mead Johnson and ConvaTec.

In Mead Johnson's case, their revenue was down for the quarter, however, they are making good gains with the addition of a new product that they launched about a year ago.

They're picking up meaningful market share, and we hope that translates into additional gains in the U.S. over the course of the year in terms of revenue growth.

The international business for Mead Johnson continues to look very positive; it continues to grow well, as it has in the past.

And for ConvaTec, they launched three or four.

In the process of launching three or four new product opportunities in osomea (ph) wound care, it looks to us like it has good growth prospects going forward in the future, and we don't envision significant portfolio changes as it relates to those two businesses.

Thanks, Tim.

Mike, can we go to the next question, please?

And we'll go with Scott Kay with Bank of America.

Hey, thanks for taking my call.

I just want to follow up quickly on Plavix.

Just so I'm clear, are you guys saying that the year-over-year growth for Plavix, even being down 18 percent in Q1, is gonna be close to that 30 percent number, or north of 25 percent?

And then, just any update, if you can, on the patent situation.

I believe there's a trial that's upcoming in the fall, so any comments on that would be great.

Thanks.

On the first part, as regards Plavix sales for the year, what we're saying is that the stock level has been reduced from around one and a half months to below one month at the end of the first quarter.

We expect, as the year progresses, to see that stock level, inventory level in the wholesalers rise again, which means we will see sales slightly above prescription trends for the remaining three quarters of the year.

And overall for the year, we expect to be on or around overall prescription trends for the full year.

I'll hand it over to Peter ...

Regarding the Plavix patent challenge question that you asked about, we believe, as we've said previously, that we have a strong legal position.

We will support Santa Fe (ph) , our partner in this, in terms of their defense of it.

We remain confident in our position, but as it goes through the court system, we'll see if there's additional risk to it.

But we feel good about our legal position as it stands today.

Thanks, Scott.

Mike, can we go to the next question, please?

We'll go to Mario Corso with Leerink Swann.

Yes.

In terms of modeling for the full year of 2003, are there any expectations for the other expense line item that you can talk about?

And then, for the quarterly pattern on the sales and there's an easy comparison in the second quarter on a year-over-year basis.

So, should we be expecting a relatively stronger second quarter, relative to others?

Thanks.

Yeah, on the other income and expense lines for the year, Mario, what we have said, I think, is overall, we would expect that generally to be at similar levels.

It's mainly driven by things like interest, which we expect probably to be around flat for the year.

Where we do expect to see a significant increase is around minority interest and that's because of the Plavix JV arrangements.

As regards the protection for the second quarter, obviously, if you recall last year, the overall earnings per share for the year were $1.25, and it was 43 cents in the first quarter.

You will see stronger growth, obviously, because of the relative performance last year in the second, third and fourth quarters.

It was weaker in the first quarter.

So, you will see stronger earnings growth in the second, third and fourth quarters as we go through.

Thanks.

Mike, can we go to the next question, please?

And we'll go to CS First Boston and Ken Kulju.

Thank you very much for taking the question.

A question on Abilify.

I was wondering if you could just talk about the other clinical development programs, the expansion of new indications associated with that antipsychotic.

And you alluded to the sales force deployment around that product line.

I was wondering if you could just talk to where your sales force is relative to Lilly, J&J, Pfizer -- in that market?

And are you fully deployed with respect to your sales commitments behind Abilify?

Thank you very much.

Let me just go to the sort of product development questions, as we are well into the lifecycle management of Abilify, even though it's just in its first year after launch.

As I said in my remarks, we've filed an SNDA for the long-term treatment of schizophrenia.

We will file in the next few months the bipolar mania SNDA.

We are then moving ahead, looking at other indications; specifically, we have trials ongoing.

We're looking at Alzheimer's Disease.

We have other new formulations, such as solution depo (ph) injections, et cetera, which we will develop in the next literally few years.

So, we're well into the lifecycle management.

There are other indications which we're looking at, which are sort of early things that we're looking at for Abilify, which potentially have significant promise.

But the things I've listed are the things that are currently on our radar screen, and have resources and dates behind them.

And to the second part of the question pertaining to Abilify and the launch and our support behind it, as I said, you know, we launched this roughly five months ago.

It's still in the early part of its growth trajectory, so it's a little too early to say definitively.

But what we can say is, we are at or above our expectations in terms of market share in prescriptions, and we've been successful so far from our perspective.

As we said during the initial phase of the launch, our strategy focused on targeting high-prescribing psychiatrists, and making sure that we were investing competitively behind that segment.

We're now moving into new doctors' offices to try to get additional trial, and importantly, to support the expansion of the product and what we believe its potential to be.

We're gonna continue to increase our sales force effort behind this.

In fact, we are planning a 50-percent increase in sales force support for Abilify in the very near future.

Thanks, Ken.

And Mike, just before we go to the next question, let me clarify, back to David Risinger's question about Cardiolite patents.

The relative patent for Cardiolite is September, 2007.

Mike, can we go to the next question, please?

We will now go to CJ Sylvester with UBS Warburg.

Hi, and thanks for taking the question.

I just want to talk a little bit about Pravachol.

First, I guess interactions with Plavix have been highlighted with other statins, and clearly, Pravachol doesn't have those interactions.

Is any of that data in your sales forces' hands, and is that something you're actively promoting?

And secondly, on Pravaguard (ph) -- if we could get some status check on that, as well.

Sure, CJ.

Let me take the first one.

You know, there has been some noise in the market place about the statin/Plavix interaction.

We have our people, internally in the R&D organization, looking back at our database and going through it to see if we can find anything.

But at this point I wouldn't say it's anything that our sales organization is actively promoting.

On Pravaguard (ph) -- did you want to say more?

Go ahead.

You can ...

OK.

On Pravaguard (ph) , we had an advisory committee vote in favor of approving it.

We're in ongoing discussion with the FDA regarding the final approval, and are hopeful that it'll be approved before yearend.

Thanks, CJ.

I think we have time for just one more question, Mike, if this could be the last one.

And we'll take that question from Burt Hazlett with SunTrust.

Thank you.

A question on CTLA4, the imuno-globulin -- in terms of the positioning of that, do you expect there to be a role for that in combination with the anti-TNF alphas?

Or, do you expect that to be used in TNF non-responders?

And in regard to Atazanavir, how long would you expect to be able to establish that as first-line therapy?

Thanks.

Let me take those questions.

CTLA4 -- the initial indication is in TNF failures and letha-trexate (ph) failures, so the phase-three program will be directed at that population.

Based on the efficacy we've seen to date, we would be hopeful that we would expand very quickly into the broader market.

And obviously, we would look at combinations with TNF.

The profile of the drug is just becoming apparent to us.

We got good phase two data, and as I said, we're in phase three of the initial studies, as I described.

With regard to Atazanavir, the advisory committee, as you know, is on May the 13th.

Obviously, we hope for a positive outcome there.

But in terms of, you know, establishing it as the one-a-day PI, I think we have a very robust package to support once-a-day dosing as we go to market.

So, I would expect as a treatment option that it would be taken up quite quickly.

The reason I say that is that, of course, it will be the only PI with a once-daily claim.

And secondly, the whole issue of pill burden and dosing frequency for HIV patients is a very significant one.

And as you know, there's very good data showing that if you miss doses or increase dosing frequency, then, in fact, you've also got the risk of viral load coming back.

The other thing which I think, you know, will be important for the treating physician will be the resistance profile.

We have the 150 signature mutation, and I believe that we will have a position where we can treat this in both PI-experienced and PI-naïve patients.

So, we're in an exciting period for Atazanavir.

We've got the advisory committee coming up.

And obviously, you know, fingers crossed, everything goes well, and we'll be getting to market with it.

Thanks, Burt.

And I think with that we're gonna bring this call to a close.

I'd like to thank everybody for joining us this morning.

If you have follow-up questions, please give myself or Sue Walter a call at BMS Investor Relations.

Thank you.

That concludes today's teleconference.

We thank you for your participation.