Bristol-Myers Squibb Essay

Michael Zouroudis
Cornerstone student in the College of Business Administration
University of Central Florida
October 15, 1999
Table of Contents
Section
Introduction/Executive Summary………………………………………………………………………………………………….3
Background………………………………………………………………………………………………………………………………..4
Marketing
Product/Service……………………………………………………………………………………………………6
Place/Distribution………………………………………………………………………………………………..7
Promotion/Advertising………………………………………………………………………………………….8
Management /Human Resources
Training and Development……………………………………………………………………………………9
Compensation and Rewards………………………………………………………………………………….9
Labor relations…………………………………………………………………………………………………..10
Finance
Profitability and Cash Flow………………………………………………………………………………….10
Liquidity……………………………………………………………………………………………………………12
Leverage/Capital Management…………………………………………………………………………….13
Conclusion…………………………………………………………………………………………………………………..13
References…………………………………………………………………………………………………………………..14
Introduction and Executive Summary
This document consists of an overall business review for the Pharmacuetical company Bristol-Myers
Squibb. Although by no means a complete summary of their 1998 business dealings or stragety, it does
give a nice overview of three of the most component and fundmentally sound aspects of any business, let
alone a Fortune 500 business.
This document starts by covering the Marketing aspect of Bristol-Myers Squibb. First covered is the most
important structure of any company; its product. Inside is information on how they distribute their
product, and where they distribute it to. Finally, we see how they promote their product, and which ways
it is advertised.
Management is the next topic of discussion. What style of management does Bristol-Myers Squibb
conduct? The document talks about compensation given to their employees, and how the average
employee is rewarded for acheving the unaverage level of excellence.

Finally, the document focuses on Finance. It shows Bristol-Myers Squibb profits, it debts, how much
money is invested in the company, and basically the direction that the Company is headed.

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Once again, this document is not nearly a complete breakdown of Bristol-Myers Squibb’s 1998 business
transactions. All this document is aiming for is to give an idea of the extreme complexity of the business
world, understand(at least a little more) the strategy and competitiveness between companies, and maybe
to enlighten a few on how much time and effort goes into such a giant of a company like this. Enjoy.

History
Bristol-Myers
In 1887 William McLaren Bristol and John Ripley Myers decided to sink $5,000 into a failing drug
manufacturing firm called the Clinton Pharmaceutical Company, located in Clinton, New York. The
company was officially incorporated on December 13, 1887, with William Bristol as president and John
Myers as vice president.

In May 1898 came a new name: Bristol, Myers Company (a hyphen replaced the original comma after
Myers’s death in 1899 when the company became a corporation).

The postwar depression prompted Bristol-Myers to jettison its ethical drug business and devote itself
entirely to its specialties: its two big winners and a dozen or so assorted toiletries, antiseptics and cough
syrups. Company headquarters was established in Manhattan, where it has remained ever since. And
having shifted squarely into the consumer products arena, Bristol-Myers began advertising its products
directly to the public.

In 1924, gross profits topped $1 million for the first time in Bristol-Myers history. The company’s
products were on sale in 26 countries. At this point, the shares held by John Myers’s heirs became
available for sale, triggering a series of moves that turned Bristol-Myers into a publicly held company,
listed on the New York Stock Exchange in 1929.

In 1943, Bristol-Myers bought Cheplin Biological Labs, and quickly entered into the field of antibiotics.
During the war, Bristol-Myers was a major distributor of penicillin and other types of antibiotics. By the
end of the war, it was clear that penicillin and other antibiotics represented an immense opportunity for the
company. Cheplin was renamed Bristol Laboratories, and Frederic N. Schwartz was put in charge of it.

In 1957 Schwartz was appointed president and chief executive officer of Bristol-Myers when Henry
Bristol chose to shed some of his former responsibilities and become chairman of the board.

Reviewing the company’s situation and prospects, Schwartz and then treasurer Gavin K. MacBain — later
Schwartz’s successor as CEO — decided that Bristol-Myers should embark on a program of acquiring
well-managed smaller companies. The two executives’ first major move in that direction was to acquire
Clairol.
Within a dozen or so years after Clairol joined the company, a number of other acquisitions followed,
including those of Drackett, Mead Johnson, Zimmer and Westwood.

In 1986 the company opened a state-of-the-art research complex in Wallingford, Connecticut, designed to
house more than 800 scientists and support staff.
In January 1994 Charles A. Heimbold, Jr., was elected chief executive officer. In 1995 Heimbold also
became chairman.

Squibb
In 1856 Edward Robinson Squibb founded a pharmaceutical company in Brooklyn, New York, dedicated
to the production of consistently pure medicines, like ether and chloroform.

In 1905 the company was sold to Lowell M. Palmer and Theodore Weicker, and the company became
incorporated. That same year, land was purchased at New Brunswick, New Jersey, for establishment of an
ether production plant.

In 1938 the Squibb Institute for Medical Research was established.

In 1944 Squibb opened the largest penicillin production plant in the world: Building 59 in New
Brunswick, New Jersey.

In 1971 Squibb Corporation established worldwide headquarters and expanded facilities for the Squibb
Institute in Princeton, New Jersey.

The Merger
In 1989 Bristol-Myers merged with Squibb, buying them out for $12.7 billion dollars. This merger
created a global leader in the health care industry. The merger created what was then the world’s
second-largest pharmaceutical enterprise.

In 1990 the Bristol-Myers Squibb Pharmaceutical Research Institute was established with headquarters in
Princeton.

Marketing
Product/Service
Bristol-Myers Squibb provides services for people in need of Health products. Although Pharmaceuticals
are their top grossing product, the breakdown can be seen as:
Medicines
Beauty Care
Nutritionals
Medical Devices
Bristol-Myers Squibb performs most of their sales in Medicines, approximately 69% of the gross income,
or $12.7 billion. They specialize in mainly six types of perscription drugs, which are:
Cardiovascular- Pravachol, Capoten, Monopril
Anti-cancer- Taxol, Paraplatin, Vepesid
Anti-infective-Zerit, Cefzil, Amikin
Central nervous system- Buspar, Serzone, Stadol NS
Analgesics- Execedrin, Bufferin
Other- Comtrex(cold reliever), Dovonex(psoriasis), Keri(moisturizing body lotion)
Beauty Care is another aspect of Bristol-Myers Squibb. In 1998, Their Beauty Care department grossed
$2.3 billion, or 12% of their total sales. Some products that are made by Bristol-Myers Squibb are:
Clariol- Daily Defense, Herbal Essence
Matrix Essentials-Salon Selective
Nutritionals are Bristol-Myers Squibb’s third largest department. This subsidary of Bristol-Myers Squibb
comprises 10% of their gross income, or $1.86 billion.
Mead Johnson Nutritionals-Viactiv, Enfamil
Medical Devices is their last category. This division of the company accounts for 9% of their annual
income, or $1.6 billion.
Zimmer- Orthopaedics
ConvaTec- Ostomy care
Place/Distribution
Bristol-Myers Squibb is an international company, with their world headquarters located in New York,
New York. The headquarters for the company’s segments are Listed as follows:
Medicines world headquarters- Princeton, New Jeresy
Beauty Care- Stamford, Connecticut
Nutritionals- Evansville, Indinana
Medical Devices- Warsaw, Indiana and Skillman, New Jeresy
Bristol-Myers Squibb manufactures products at forty-three major worldwide locations with a floor space
of roughly 12,950,000 square feet. Forty-one are owned by Bristol-Myers Squibb and two are leased.
The geographic location of the company is as follows:
Beauty Medical
Medicines Care Nutritionals Devices Total
——— —— ———— ——- —–
United States 8 2 2 3 15
Europe, Mid East and Africa 9 1 1 1 12
Other Western Hemisphere 7 1 2 – 10
Pacific 5 – 1 – 6
—- —- —- —- —-
Total 29 4 6 4 43
In 1998, worldwide sales accounted for $18.3 billion, a 9% increase over 1997. Domestic sales
represented 61% of total sales at $11.1 billion. International sales had a 39% share of total sales drawing
in $7.2 billion.

GEOGRAPHIC AREAS Net Sales Earnings Before Taxes
—————- ———————— ————————
1998 1997 1996 1998 1997 1996
——- ——- ——- —— —— ——
United States $12,527 $11,014 $ 9,661 $3,278 $2,700 $2,512
Europe, Mid-East and
Africa 4,873 4,653 4,520 1,139 1,109 988
Other Western Hemisphere 1,749 1,586 1,307 223 225 145
Pacific 1,457 1,636 1,563 2 52 69
Inter-area eliminations (2,322) (2,188) (1,986) (76) 40 59
——- —— —— —— —– —–
Net sales and earnings
before taxes $18,284 $16,701 $15,065 4,566 4,126 3,773
======= ======= =======
Special Charge (800) – –
Other 502 356 240
—— —— ——
Earnings before taxes $4,268 $4,482 $4,013
Promotion/Advertising
The pharmaceutical products and the medical devices segments of Bristol-Myers Squibb are promoted on
a national and international level in medical journals and directly to the medical profession. Also utilized
is the direct-to-consumer advertising for a number of its products. Most other products made by
Bristol-Myers Squibb are advertised on:
Television
Radio
Print media
Window and in-store displays
Consumer offers
None of the segments is solely dependent upon one customer, or a few customers, so that the loss of a
customer should not have a material adverse effect upon the segment.

Management/Human Resources
Bristol-Myers Squibb pertains to a centralized/pyramid management. A Board of Chairmen elect the
officers of the company to serve out a term. The company is headed by a CEO, followed by a CFO, and
so on. Assigned personnel are placed in individual aspects of the company and are put in charge of these
divisions, only to answer to their superiors. Their international subsidaries are maintained by appointed
personnel who control their subsidary, but also answer to a superior.

Training and Development
Training programs are conducted internally and externally throughout Bristol-Myers Squibb. Programs
that are taught internally deal with competency, development, and coaching and feedback. Management
programs taught internally are:
Management Orientation-offers support, guidance, information, and opportunities to network and share with other new managers.

Key Manager/Executive Integration-helps the transition into leadership roles
Global Leadership Development Program-Programs that help managers increase their effectiveness in meeting global challenges
Management Forums-facilitated by senior management to encourage information sharing and creative problem solving across divisional and functional boundaries
External training is also encouraged at Bristol-Myers Squibb. Tuition Reimbursement programs are
effective for all eligible employees, providing up to 100% of the cost of the class or classes attended.

Compensation and Rewards
Creative thinking is encouraged at Bristol-Myers Squibb. The company spends $1.6 billion on research
and development each year to try to discover new medicines. Bonuses are awarded annually(and even
quarterly in some instances) to employees who go beyond expectations. Stock options are given to every
employee at the company through their program entitled TeamShare, although if performance levels are
high, stock options become higher. Annual raises are also given to each employee, once again the amount
raised in the employee’s salary all depends upon their performance. Once a year, the President’s Award
is given to the employee who has achieved the highest level of excellence in the company. One
outstanding employee, nominated by their manager, is given a performance review by the company to
compare with other employees in the same situation. The winner of the reward receives a cash prize.

Labor Relations
Bristol-Myers Squibb believes in good labor relation. Although all benefits for employees are only for
non-unionized employees, the company makes it so that no union has a need to come about. Some
programs enacted for the employees are:
Competitive wages with other companies
Annual bonuses
Annual raises
TeamShare program-allows employees the option of purchasing stoks from the company
Although no special labor laws are practiced in the company, Bristol-Myers Squibb does expect their
employees to maintain the highest level of quality that is possible. Annual performance reviews are done
on most of their employees, and on-the-job training is given to those who need the extra support.

Finance
Profitability and Cash Flow
In 1998, Bristol-Myers Squibb recorded sales of $18.3 billion, about $1.5 billion more than 1997.
Bristol-Myers Squibb finished with a gross profit of $4.3 billion. At the end of 1998, the company’s
market value exceeded $133 billion, making Bristol-Myers Squibb one of the top 15 publicly traded
companies worldwide in terms of market value.
FIVE-YEAR FINANCIAL SUMMARY
OPERATING RESULTS
—————————
(in millions, except per share amounts)
1998 1997 1996 1995 1994
——– ——– ——– ——– ——–%0
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