Bristol-Myers mulls sale of major brands

/ Source: The Associated Press

Bristol-Myers Squibb Co. is in talks to sell its consumer over-the-counter drug line, which includes pain relievers Excedrin and Bufferin, cold medicine Comtrex and Keri lotions, according to published reports.

The pharmaceutical giant, which has struggled to restructure in the face of lost patents on key drugs, is working to shed noncore consumer products as it focuses on drugs to treat and prevent disease, The New York Times and The Wall Street Journal reported Tuesday on their Web sites, citing people familiar with the discussions.

A Bristol-Myers spokesman declined to comment to the Associated Press late Tuesday. A call seeking additional comment Wednesday was not returned.

The Times cited unnamed executives as saying UK-based GlaxoSmithKline Plc and some private equity firms were interested in the unit. A deal could happen as quickly as next week, executives told the Times.

GlaxoSmithKline had no immediate comment.

Analysts estimate the consumer medicines unit to be worth $700 million to $1 billion, the Times reported.

Bristol-Myers also sells cholesterol drug Pravachol, blood thinner Plavix, and cancer treatment Paraplatin. The company’s diabetes drug, Glucophage, and Paraplatin recently lost patent protection and sales have skidded.

The drug maker has been shedding non-core assets as it moves to sharpen its focus on drug discovery and marketing. Last month, New York-based Bristol-Myers sold its Oncology Therapeutics Network business to an affiliate of J.P. Morgan Chase & Co. for undisclosed terms. In 2001, it sold Clairol hair products line to Procter & Gamble Co. for $4.9 billion

The over-the-counter unit accounts for less than 2 percent of the company’s $21 billion in annual sales. David Moskowitz, an analyst at Friedman, Billings, Ramsey, had mixed feeling about the sale because while the business has low margins it also generates cash flow that helps maintain Bristol-Myers’ dividend. Numerous analysts have noted that the 4.5 percent dividend is helping prop up Bristol-Myers’ stock at a time when the company’s sales and profits are under pressure.

“At this point I’m surprised they want to give up something that helps sustain the dividend,” Moskowitz said.

He said he expects the division to generate $350 million in sales this year. But the sales have much lower margins than prescription drugs. Moskowitz said the consumer health products have gross profit margin of around 35 percent to 50 percent while drugs’ margins range from 80 percent to more than 90 percent.

Bristol-Myers shares slipped 4 cents, or 0.2 percent, to $24.83 in Wednesday morning trading on the New York Stock Exchange — near the low end of its 52-week trading range of $22.22 to $31.30.