施貴寶 (BMY) 2004 Q4 法說會逐字稿

Good day, and welcome to today's Bristol-Myers Squibb Company fourth 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.

Thanks, Teri, and good morning, everybody, and thanks for joining us for our discussion of Q4 earnings.

Our release and related financials, if you haven't seen them already, are posted on our website at www.bms.com, and if you go to the investors page.

With us this morning is Peter Dolan, our Chairman and CEO;

Andrew Bonfield, our Chief Financial Officer;

Don Hayden, Executive Vice President and President of the Americas; and Elliot Sigal, our Chief Scientific Officer.

Peter and Andrew will have prepared remarks, and Don and Elliot will join them for Q&A afterwards.

First, let me cover some legal requirements.

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 Provision under the Private Securities Litigation Reform Act of 1985.

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 Bristol-Myers Investor Relations.

In addition, the 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 information 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.

Thanks, John.

Good morning, everyone.

I want to spend a few minutes providing some perspective on our performance for the fourth quarter and for the full year.

I'll also give an update on our progress in executing our strategy; and following my remarks, Andrew will go into more detail about our fourth quarter and 12-month results.

Then we'll go to your questions.

First, our earnings results.

For the fourth quarter, our non-GAAP earnings per share from continuing operations were $0.39, excluding specified items, which was significantly ahead of the consensus view of $0.33.

For the full year, our non-GAAP fully diluted EPS from continuing operations were $1.70, excluding specified items.

You may recall that we had earlier estimated our non-GAAP EPS in the range of 1.60 to 1.65.

On a GAAP basis, fully diluted earnings per share for the fourth quarter were $0.07, and fully diluted earnings per share for the year were $1.21.

Earnings were impacted by a fourth quarter charge of 575 million for estimated deferred taxes, which was taken in anticipation of repatriating approximately 9 billion in offshore earnings in 2005 under the American Jobs Creation Act.

We continue to evaluate our options in regard to repatriation of these earnings, and Andrew will provide additional information in his comments.

In the quarter and for the year, we saw solid performance across a number of our franchises, businesses, and geographies.

Among our in-line growth drivers, Plavix, which together with Avapro we co-commercialize with our partner , Sanofi-Aventis, continues to enjoy robust growth, with a 19 percent increase in sales for the quarter and a 35 percent increase for the year.

In fact, our Plavix sales surpassed $3 billion , making it our largest brand in terms of sales.

Avapro sales were also quite strong, up 13 percent in the quarter and 23 percent for the year.

We continue to be pleased with the performance of our 3 newer products: Abilify, which we co-promote with Otsuka Pharmaceutical Company;

Reyataz and Erbitux, which we co-promote in the U.S. with ImClone Systems.

In the case of Abilify and Reyataz, both are now benefiting from strong launches in Europe in addition to the performance in the U.S.

Abilify was launched in nine European countries in 2004, including the UK and Germany, and it's had the fastest uptake in nearly all those markets of any antipsychotic in the atypical class.

Reyataz market share is as high as 31 percent in the UK and it has an average market share of 27 percent in other key European markets.

Also, related to our HIV aids franchise, we announced in December details on a joint venture to develop and commercialize the fixed dose combination of Sustiva in Gilead's Truvada in the United States.

If approved, the new product would be the first complete highly-active, antiretroviral treatment regimen for HIV, available in a fixed dose combination taken once daily.

This further strengthens our franchise position in HIV/Aids.

Our related health care businesses had an excellent year by any standard, and continue to demonstrate strong growth.

Mead Johnson, ConvaTec and Medical Imaging collectively delivered solid sales gains in 2004, with double digit increases in several key products and lines.

These businesses exceeded their 2004 plans, and in aggregate had year over year profit growth of nearly 20 percent.

Representing about 20 percent of our total company sales last year and more than a quarter of our earnings, these businesses are important contributors to our overall financial performance, and provide valuable strength and stability.

Many of you attended our R&D Day in mid-November, so you're aware of the progress we've made in our pipeline in 2004.

We continue to invest significantly in R&D, potentially behind our late stage opportunity.

R&D expenses increased 12 percent to $2.4 billion for the year, which included investments in late stage development in building our biologics capacity.

Regarding our three regulatory submissions, we submitted Entecavir, a potential treatment for Hepatitis B, to the FDA in September, and to the EMEA in October.

Entecavir was granted priority review by the FDA, and we're now preparing for an advisory committee meeting on March 11th.

We submitted Muraglitazar, our dual [INAUDIBLE] that we're co-developing and commercializing with Merck to the FDA in December.

A rolling submission for Abatacept, a novel biologic for rheumatoid arthritis, began in November, and we expect completion of our full submission by early this year.

Abatacept has received fast track review status from the FDA, and we've recently learned that our Src/ABL kinase inhibitor for treating CML, a type of leukemia, has been granted fast track review status as well.

We're making good progress executing our strategy.

Over the past year, we've launched new products, advanced our late stage pipeline, and concluded several licensing agreements, activities that in aggregate are building a solid position for the company in our ten disease areas of focus.

We've taken measures to concentrate our sales and marketing resources on specialists and high-prescribing primary care physicians.

We've invested in R&D growth and A&P support behind our growth drivers.

We've put several hundred million dollars behind our biologics capability.

And we've moved to control our cost structure by consolidating information management, pharmaceutical development and global medical affairs, as well as rationalizing manufacturing.

As we've said previously, earnings will continue to be pressured through this portfolio transition period over the next two years, as a result of exclusivity losses of higher margin products, as well as investments behind our pipeline in our business.

For 2005, we estimate our fully diluted earnings per share from continuing operations to be between $1.35 and $1.45 on a non-GAAP basis, taking into account potential specified items which are outlined in the press release.

The estimated fully diluted earnings per share from continuing operations is $1.27 to $1.37.

Finally, let me make a comment or two about the overall environment for our company and industry.

The challenges we're all facing are well known, from pricing pressures to increased regulatory scrutiny.

We've recognized these challenges for some time, and several years ago started to fundamentally restructure our company and our sales force to focus on those areas where we could build sustainable growth and leadership for the future.

For well over 18 months now, one of our company-wide priorities has been to hold flat or reduce spending on non-priority products in sales force and in G&A.

We have been executing against that priority, and our 2004 results and 2005 plan reflects that objective.

It's allowed us to invest not only in R&D, but also behind our new product launches, and to build our biologics capability.

The organization is executing our strategy , and we're now more than halfway through a significant shift in our portfolio.

Our actions have positioned us to move forward in the current and future environment.

Now let me turn things over to Andrew Bonfield.

Thank you, Peter and good morning, everybody.

I'll be discussing the fourth quarter results and provide a brief overview of our 2005 guidance.

As you all have seen from our release, fully diluted earnings per share from continuing operations for the quarter was $0.07, negatively impacted by $0.32 of specified items, primarily the $575 million charge for deferred taxes in anticipation of the repatriation of foreign earnings in 2005.

Excluding the specified items, fully diluted earnings per share on a non-GAAP basis were $0.39, well ahead of the First Call mean estimate.

As is our usual practice, the full reconciliation of GAAP to non-GAAP earnings per share are posted on our website.

Full year fully diluted earnings per share were $1.70, excluding specified items, ahead of our previously issued guidance.

As you know, during the quarter, we announced our intention to follow OTN; and consequently, the results for that business are shown as a discontinued operation.

Therefore, my discussion of the 2004 results and 2005 guidance will be for continuing operations excluding OTN..

Sales from continuing operations were up 2 percent to $5.2 billion.

The sales performance resulted in a 3 percent increase due to foreign exchange rate fluctuations, offset by a negative 1 percent impact on price.

Volumes are flat year on year.

Worldwide pharmaceutical sales were up 1 percent to $4.1 billion, which included a favorable 4 percent benefit from foreign exchange.

Price, principally Paraplatin and Taxol, had a negative 3 percent impact on the quarter.

U.S. pharmaceutical sales were flat at $2.2 billion.

Sales were negatively impacted due to exclusivity losses, principally Paraplatin and the [INAUDIBLE] franchise.

Our key growth drivers in the U.S, Plavix, Avapro, Erbitux, Reyataz and Abilify, had another strong quarter, with year sales of $1.3 billion versus $964 million in the comparative period of 2003.

These key growth drivers make up 59 percent of U.S. sales in the quarter compared to 43 percent in the same period of 2003.

Also, a buying patent had some impact on growth rates on the quarter, and inventory levels for key U.S. pharmaceutical brands at the end of the fourth quarter rose slightly, and are just above the three-week mark.

As we have done for the third -- as we did for the third quarter, we've included wholesale inventory levels by key U.S. pharmaceutical brands on our website.

International pharmaceutical sales grew by 3 percent to $1.9 billion, including an 8 percent benefit from foreign exchange.

The sales decline, excluding foreign exchange, is primarily due to increased competition in Europe for Pravachol and Taxol, partially by offset by Glucophage and Abilify, both of which were launched earlier in the year.

Now let me move on to a few of our key brands.

Worldwide Plavix sales increased 19 percent to $959. million.

This is on the strength of a 19 percent in U.S. script writing.

Worldwide Pravachol sales is $710 million.

We're down 3 percent.

U.S. sales were positively impacted by an increase in wholesale inventory levels estimated to just under three weeks at the end of 2004, and reduced managed care rebaits.

This more than offset the impact of the 16 percent decline in U.S. scripts for the quarter.

International sales were down 23 percent excluding foreign exchange, due to the exclusivity losses in Europe, principally in the U.K. and Germany.

We reported $191 million in total revenue for Abilify , including $21 million internationally.

This translates to approximately $286 million in sales for the compound, as we report only 65 percent of revenue in the U.S. and in certain international markets.

This meant the total sales for Abilify are now trending at more than $1 billion per annum.

Success in the U.S. continues, with a new script share of over 10 percent in the most recent week.

Additionally, total scripts per quarter were just over 700,000, up 10 percent over the third quarter.

Sales for Reyataz, a novel protease inhibitor launched in July of 2003, were $148 million.

Reyataz has now -- now has approximately 28 percent new script share of the USPI market, excluding retonovir.

Additionally, Reyataz sales included $49 million in international revenue, and strong market share is being reported in a number of markets.

Erbitux closed 2004 with continued month over month sales growth and total sales for the quarter of $88 million.

Performance is in line with our expectations in terms of usage and penetration within this indication.

Excluding the impact of the divestiture of the add-on nutritionals business, Mead Johnson sales grew by 7 percent to $505 million.

Strong international sales growth continued, up 15 -- up 16 percent excluding foreign exchange, driven by increases in Infant Formula and Children's Nutritionals.

ConvaTec and Medical Imaging also both reported very strong sales growth for the combarter.

ConvaTec was up 3 percent excluding foreign exchange, primarily due to continued strength in Wound Therapeutics.

Medical Imaging was up 19 percent, and CardioLite had another strong quarter, up 35 percent.

Now let me move on to the rest of the profit and loss account.

The gross margin in the fourth quarter was 67.7 percent compared to 70 percent in the fourth quarter of last year.

I would remind you that this excludes the impact of OTN from both periods.

Specified items reduced the gross margin by .2 percent quarter over quarter.

The remainder of the margin decline was primarily due to the mix in the U.S. business, including the impact of Paraplatin and [INAUDIBLE] losses, and the introduction of Erbitux.

The gross margin, excluding specified items for the worldwide medicines business, fell by 3.7 percent from the fourth quarter of 2003 to 69.4 percent.

The decline is principally due to the loss of higher margin products, such as Parplatin, Monopril and the [INAUDIBLE] franchise, and the impact of the launch of Erbitux.

Marketing, selling and administration expenses were up 11 percent, mostly in general and administrative expenses, due to the unfavorable impact of foreign exchange, higher pension expenses, costs associated with Sarbanes-Oxley compliance, increases in Teratol contributions and clinical [INAUDIBLE] for new products, and implementation of productivity initiatives, which had upfront costs.

Advertising and promotional spend was up 2 percent, with increased spend behind Abilify, Reyataz and Plavix, offset by lower spending on more mature brands.

Through the year, A&P spending was flat versus 2003.

Excluding the specified items, R&D expense for if quarter increase 4 percent to $660 million, and 12 percent for the year to $2.4 billion.

This increase was primarily driven by spending on increased resources behind development projects, including late stage development spending on Entecavir, [INAUDIBLE], and Muraglitazar.

Full year pharmaceutical R&D as a percentage of sales rose from 14.2 percent to 14.8 percent.

Equity income from affiliates increased by $42 million as a result of favorability in a share of income and an increase in minority income that stemmed from the sale of [INAUDIBLE] joint venture products outside the U.S.

The minority interest expense net of taxes increased by $9 million to $134 million, primarily as a result of the strong growth of Plavix in the U.S.

The effective tax rate from continuing operations before minority interest and income taxes, and excluding specified -- specified items in the fourth quarter, decreased to 19.3 percent from 25.6 percent last year.

The rates of the quarter benefited from higher falling tax credits related to the reorganization of foreign subsidiaries in 2003.

I'll talk more about this in a moment.

The full year rate, excluding specified items, was 21.6 percent compared to 24.6 percent in 2003.

Let me make a few comments about cash and financial liquidity.

Operating cash flow remains strong, and net debt at the end of the quarter was $2.9 billion, flat versus the third quarter and down from $3.2 billion at the end of 2003.

During 2004, we were able to reduce net debt while funding the dividend, capital expenditures, licensing [INAUDIBLE] and litigation settlements.

As I mentioned earlier, during the quarter, we have taken the charge in anticipation of repatriating the earnings in 2005 as a result of the Jobs Creation Act.

At 31st of December 2002 we had around $9 billion of unlimited earnings in that foreign subsidiary.

We are in the process of analyzing the recent issue guidance -- guidelines -- for potential uses of the cash, where we expect to utilize the cash to stabilize our financial position and strengthen the balance sheet.

I expect to be able to provide you an update on this during the first quarter call.

Now let me turn to 2005 guidance.

As you will have seen from our press release, our full year 2005 GAAP guidance is $1.27 to $1.37 -- or $1.35 to $1.45 on an adjusted non-GAAP basis.

Again, the full reconciliation is posted on our website.

We expect sales to be roughly flat with revenue growth from key in-line products, offset by key exclusivity loss.

Gross margins will be slightly below 2004 levels, based on product mix.

Overall, the full margins will be less than 1 percent.

Advertising and promotional spends should be up in the mid to high single digit range, due to increased spending on growth drivers and potential new product launches.

There will also be a shift towards our growth drivers from older brands.

We are targeting selling and administrating expenses to decrease slightly, reflecting our focus on expense control.

R&D spend is projected to grow in the mid to high single digit range behind the strength of our late phase pipeline..

Minority interest expense will increase as Plavix sales in the U.S. continues to grow, and we would expect a slight decline in interest expense as a result of the expected repatriation of earnings.

Our other health care businesses will provide stability in earnings and cash flow as we continue with the transition of our pharmaceutical portfolio.

As I mentioned in the second quarter call, the tax rate is expected to increase in 2005.

The tax rate for 2005 is expected to be closer to the 2003 rate of 24.6 percent than this year's rate of 21.6 percent.

The rate will be adversely affected by the loss of offshore Paraplatin and a reduction in foreign tax credits.

As I mentioned earlier, the 2004 rate benefited from the high level of foreign tax credits related to reorganizations of foreign subsidiaries in 2003.

As we're looking forward, the level of dividends that we'll receive in the U.S. with higher foreign tax credits will decrease to more normal levels.

This will have the effect of increasing the tax rate in '05.

Therefore, the tax rate in the early part of the year should be at its highest level.

However, the rate is expected to reduce once we've completed tax audits for the years '98 through 2001, and the potential benefits are reflected in the rate.

It should be noted that these will be treated as a discrete item in the quarter in which the order is completed.

This potential variability is one reason why our guidance range is a little wider than normal.

As Peter said, our business plan for 2005 reflects further implementation of our strategy as we continue the transformation of the product portfolio.

In summary, the fourth quarter and full year performance exceeded our previously issued guidance and First Call mean estimates.

Our growth drivers in newly launched products in the health care businesses continue to perform well.

Our 2005 guidance reflects continued execution into that strategy.

Now I'll hand it back to John for the Q&A session.

Thanks, Andrew.

And Teri, I think we're ready to go to Q&A.

If I could ask everybody, in the interest of time and to try to get as many questions in as possible, to limit your questions to one.

I know that's hard.

And I'd also remind you again that both Elliot Sigal and Don Hayden are here for the Q&A as well.

So Teri, are we ready?

Thank you.

The question and answer session will be conducted electronically.

If you do have a question, please press the star keep followed by the digit 1 on your touch-tone telephone.

Once again, it's star 1 if you do have a question And we'll go first to Carl Seiden, UBS.

Thanks very much.

I think that the -- the difference in terms of your GAAP guidance and your adjusted guidance is $0.08, and in the press release there was a description of that difference primarily being charges for milestones on one hand and manufacturing restructuring on the other.

Can you give us any details on how it breaks up between those two and what's going on?

And I guess more philosophically it seems like different companies treat those milestone payments differently, some thinking of them as extraordinary and some thinking of them as fundamental to the ongoing operations -- and if you could just tell us your philosophy behind how you're treating the milestone payments.

Thanks.

Yes, Carl.

Our philosophy really comes from the concept that milestones, as related to an event -- sometimes which is we don't have control of, which is maybe a filing or a -- a regulatory approval.

When we do our budgeting for the year, what we don't want to do is to create a pool that people then limit themselves to when they're looking at our licensing deals.

One of the things I think we have been extremely successful on is actually licensing in a number of compounds in the past couple of years, and our philosophy is that where the risk of adjusted weighted average cost of capital in any deal is above the overall cost of capital for the company, we should be investing in those products.

So rather than limit ourselves and include it within guidance and then always have to adjust guidance for milestones, we've tended to exclude those.

On the basis of the amounts of the $0.08 for 2005, I would say the vast majority of it is -- is actually related to restructuring, and that I think is around about $0.06 of the $0.08, and the other is related to milestones -- it's about $0.02.

Thanks, Carl.

Teri, can we go to the next question?

We'll go next to Jami Rubin with Morgan Stanley.

Thank you.

I was just wondering, Andrew, if you could talk about the generic environment in Europe for Taxol.

We've been anticipating it all year long and it hasn't really occurred, and one reason for the relative upside on revenues.

Can you talk about what the issues are in Europe with respect to Taxol and how we should think about generic competition in 2005?

Thanks.

Thanks, Jami.

We did actually see more generic competition in the fourth quarter; and in fact, Taxol sales in Europe for the fourth were down excluding foreign exchange by around about 4 percent.

We have seen additional entries into the marketplace.

There was a delay in generic entry during the year.

I think as we've moved into the fourth quarter, we've seen increased competition arising; and therefore, our expectations are that that competition will continue to increase through 2005.

Not only from the [INAUDIBLE] perspective, but also a pricing perspective.

At this point the in time, as we work towards our 2005 business plan, we are expecting significantly increased competition in Europe in 2005.

Thanks, Jami.

Teri, can we go to the next question?

We'll go next to Timothy Anderson, Prudential Equity Group.

Thanks.

Abilify in the markets in Europe where you've launched -- I'm just wondering if you can just give us some statistics there, such as, you know, the source of business, what atypicals are you taking the most share from in your opinion, and if you have data like new patient starts versus treatment failures versus switches, how it seems to be breaking out since you've launched that product?

We have some information, Tim.

Abilify has been launched in the UK, Germany, Switzerland, Ireland, Greece, Denmark, Finland, the Netherlands.

We expect to launch in France in the first half of 2005.

While it's still pretty early, we are very pleased with the launch to date with results that show that Abilify's meeting or beating the uptake of Zyprexa. its comparable point in launch in various countries.

Trends continue to be strong based on the efficacy profile of Abilify, and we're pleased with what we've seen so far; and while it's early, we look forward to seeing continued growth in those markets.

Thanks, Tim.

Teri, next question, please.

And we'll go next to David Risinger with Merrill Lynch.

Thanks very much.

With respect to CTLA -4IG, you mentioned that it received fast track review status.

Could you please define that for us and talk about what that implies for approval timing and what your guess is for the potential [INAUDIBLE] date?

Elliott Sigal, M.D., Ph.D.: Yes, David, this is Elliot Sigal.

The rolling submission status, -- this is actually a continuing marketing application pilot study of the FDA -- indicates the willingness of the -- on the part of the FDA to take the information we supply when we have it ready and begin the review on that specific section.

So in November, for example, to the BLA we -- we supplied information on the preclinical package for Abatacept.

Shortly thereafter, we supplied the complete clinical information, and we are finishing the CMC section and hope by -- within the first quarter to complete that section, which will complete the submission.

But as I mentioned, on a rolling basis -- on a rolling basis, we -- we are working with the agency as they review the information, as we supply it.

The clock starts when they receive the final submission date, and it will be their determination at that time whether this receives a priority review.

So we can only estimate, again, as we talked about in November, that we expect a launch by the end of the year, and that's the clock that we're working on with regard to all our plans.

But we'll be hearing more from the FDA.

Thanks a lot, David.

Next question, please.

Next we'll go to Barbara Ryan with Deutsche Bank.

Most of my question was already asked, but maybe if you could just clarify a little bit more in detail Abilify, for example in the UK, Germany and some of the larger markets, you know, how long you have been on the market, and anything, you know, in terms of a little more color there.

We've been on the market roughly since mid year.

I'd referenced earlier the markets where we've launched; and obviously, given the importance of France as a market, we're looking forward to the launch there.

I don't have much more information we can provide at this point on the launch other than what we've already commented on.

We'll go next to David Moskowitz with Friedman, Billings and Ramsey.

Yes, thanks.

Just a brief question on Muraglitazar.

Are you guys expecting an FDA panel for that product, and if so, when?

Elliott Sigal, M.D., Ph.D.: Yes, David, this is Elliot again.

It will be a determination of the FDA of whether there will be an advisory committee, so we expect to be hearing their -- their decision on that.

It will be up to them to schedule it , and we don't have any information on it.

However, we are preparing for an advisory committee as I mentioned, November 17th.

This is a first-in-class agent for diabetes type II.

We have extensive information and characterization of the benefit/risk.

It offers a target of unmet need in better glycemic control and durability and control of lipids.

However, in this class, there have been a lot of issues and concerns of other compounds, and since this is the first-in-class agent, it's wise for us to prepare for an advisory committee.

And when we hear that decision from the FDA, we'll announce the timing of that.

We'll go next to Catherine Arnold, Credit Suisse First Boston.

Thanks a lot.

I have a question regards to accounts receivable.

There was a sizable increase year over year -- about 700 million in the fourth quarter -- and most of this came with a 500 million increase.

Could you share with me what drove this change and what we should expect in 2005?

Thanks.

Yes.

Catherine, I think it probably actually was an increase in deferred tax asset balances, and the reason for that is back to the foreign tax credits I mentioned earlier, which were the building up -- or we actually achieved more foreign tax credits in 2004.

Overall, the actual movement on working capital was pretty favorable in the -- in the year, and the cash flow as far as that's concerned.

So it was outside normal accounts receivable activities.

Thanks, Catherine.

Teri, could we have the next question, please.

We'll go next to Jim Kelly with Goldman Sachs.

Thank you.

The question has to do with the accelerated depreciation.

Is that expected to go on for any more quarters, or are we -- has that -- has that been completed?

Thanks.

On the accelerated acceleration, part of the reason for the difference between the non-GAAP and the GAAP driving the $0.06 is actually continued accelerated depreciation in 2005.

And we'll go next to C.J.

Sylvester, Banc of America.

Hi, thanks.

Maybe just a little bit more clarity as to what's going on in -- with Taxol.

If you guys could break out perhaps the growth rate in Japan, where I think it's pretty robust, and what kind of percent that is of the overall non-U.S. franchise?

We -- we referenced earlier -- Andrew talked about what was going on in Europe.

Taxol lost data exclusivity in Europe in the third quarter of 2003.

We then began to see some generic competition in some of the key countries during the second quarter, and it's accelerated through 2004.

Fourth quarter international sales of Taxol were down about 4 percent excluding foreign exchange.

Specifically, the EU Taxol sales represent a little more than about 50 percent of the company's international Taxol sales.

And we'll go next to Steve Scala, SG Cowen.

Thank you.

I'd like to follow up on Carl's question.

I'm still not clear on where the $76 million provision for restructuring appears in the various P&L line; and based on the answer you provided -- and just to be clear once again -- the 15 million milestone payment in Q4 is excluded from continuing ops, is that correct?

And if you'd like to tell us your plans for OTC Pravachol, that'd be great.

Okay.

On the 76 million, some of it appears within cost of goods.

There will be other items -- I think John will provide the -- be able to provide details -- details for you, Steve, after the call.

As regards to $15 million milestone charge, that is excluded from earnings, excluding specified items.

You're correct.

And on the question on Pravachol OTC, Pravachol OTC is a part of our U.S.

Consumer Medicines business.

We have an ongoing program designed to answer questions previously asked by the FDA.

At this point in time, as part of our U.S.

Consumer Medicines business, we expect that Pravachol OTC would be included as part of the planned divestiture of that business.

However, we're continuing to explore our options around that.

And in -- in our work around Pravachol OTC, Steve, we're also partnered with buyer.

Thanks, Steve.

Teri, I think we have time for two more questions.

Okay.

We'll go next to Mario Corso with Summer Street Research.

Mr. Corso, your line is open.

Yes, can you tell me in terms of 2005 guidance, what type of, if any, revenue contribution there is from the combination of Entecavir, Muraglitazar, and Abatacept in terms of is there a revenue contribution or not?

And then in terms of '04 having beaten estimates a few times, can you talk about generally where the company had better success relative to its plan?

Thank you.

Okay, Mario.

On the new products, they are expected to make a small contribution in 2005, as we've indicated.

Expectations around the launch fairly late in the year, so we don't expect significant sales from the new products in 2005.

As regards where is the outperformance come from, the share, I think principally there's been a couple of areas, and in the fourth quarter in particular I'll highlight two.

Which is the fact that we actually underspent our expenses that we were projecting for the fourth quarter, and also there was a little bit of [INAUDIBLE] between the tax rate earlier in the year.

We did see some significant favorability around Taxol in Europe, and that was one of the other major assumptions.

For the year, the international pharmaceutical business had a very strong year versus their plan -- as Andrew said, in part due to Taxol's improved performance versus our expectations and the advent of generic competition -- but the operating performance for the line of products in Europe was quite strong in 2004.

Our health care businesses also had a very strong year, as I mentioned earlier.

They, too, contributed to the performance above plan over the course of the full year.

Okay.

Thanks, Mario.

Teri, do we have another question or two?

Yes, we'll go to John Boris, Bank of Montreal.

Good morning.

Thanks for -- for taking my question.

On -- you know, a line item, such as Coumadin, I just have a question on that for some reason.

You know, the percent change on the Coumadin line was up 41 percent, about 20 million greater than expected.

Is there something going on with the generic supplier there that we should be focused on?

Also on Abilify, can you just comment on the EU markets for the rollout schedule that you have for the major supplier of European markets?

And then is it possible to just get an update on Abatacept's manufacturing?

John, on Coumadin, I'll have to get back to you on that.

I can give you a call later.

And then I think Peter actually covered the EU markets, which we can come back to if you'd like, and Elliot do you want to talk about Aba manufacturing?

Elliott Sigal, M.D., Ph.D.: Yes.

We discussed this extensively November 17th at the R&D day -- our plans for a manufacturing strategy for the biologic Abatacept for rheumatoid arthritis.

And as you know -- biologic manufacturing can be complex but we are confident that our plan is working, and we will generate initial supply from our Syracuse facility.

As I mentioned, the BLA for Abatacept is submitted on a rolling basis as part of a fast track review, and we plan after approval to file a supplemental BLA to secure additional third party supply for our long-term need soon after approval.

Now, the timing of these events are key.

But we believe we are on track for a launch in the second half, as previously disclosed and as we discussed November 17th.

And as I said earlier, we've already launched Abilify in a number of the big markets in Europe.

The most significant one to come is France, which we expect to launch in the first half of 2005.

Okay.

Teri, I think we have time for just one more question.

We'll go next to Tony Butler with Lehman Brothers.

Yes, thank you.

I'll be brief.

Peter, you've alluded to the other health care businesses; and regrettably, we don't focus on them -- at least on our side.

Can you explain perhaps how you've charged the leaders of those businesses to actually drive the profitability, which I believe just continues to move higher?

Thanks.

Tony, the -- the three businesses that make up our health care businesses at this point -- Mead Johnson, roughly $2 billion in revenue, had a very strong year in 2004, driven by international growth of our Infant Formula and Children's Nutritional businesses and geographic expansion of those products, particularly in our Asia Pacific markets.

ConvaTec had an extremely strong year.

The Wound Care business continues to demonstrate superb growth.

We made an acquisition that helped facilitate some of that in Wound Care.

The ostomy business had a strong year as well in 2004.

In Medical Imaging, CardioLite just had an exceptional year, and that drove the performance of those businesses.

What we've communicated to all the leaders of those businesses are they are an important part of the company.

They contribute to the growth and stability of Bristol-Myers Squibb.

They -- we expect them to continue to be focused on their cost base and making appropriate tradeoffs to invest in their growth vehicles; but clearly, they're part of the company.

They, too, need to develop strategies consistent with the overall company strategy, and we are really pleased with the performance of those businesses in 2004.

Okay.

Tony, thanks a lot for the question.

That concludes our call.

And before -- before we close, I think Peter just has a couple quick remarks.

Just in conclusion, strong year in 2004, certainly against our plan.

We are executing our strategy, and I am pleased with the organization and the various businesses and geographies executing against that strategy.

We look forward to 2005.

Thank you.

That concludes today's teleconference.

Thank you for your participation.