Bristol Myers Squibb Co. (BMY), AstraZeneca plc (ADR) (AZN): Expanding P/E Saved This Pharma Investment

So much for Bristol Myers Squibb Co. (NYSE:BMY)‘s long-term post-Plavix guidance.

Three years ago, the company told investors not to worry. It had a plan to replace the $6 billion drug that lost patent protection last year. This year’s adjusted earnings were supposed to be at least $1.95 per share, higher than the company had in 2009.

Today, the pharma company said it expects adjusted earnings for this year to come in between $1.70 to $1.78 per share, down from the $1.78 to $1.88 per share estimate that Bristol Myers Squibb Co. (NYSE:BMY) gave at the beginning of the year, and well below the $1.85 per share Bristol-Myers posted in 2009.

Blame it on the new kids
There was no doubt that Plavix sales were going to plummet; second-quarter sales were down 94% year over year. Bristol Myers Squibb Co. (NYSE:BMY) needed the new drugs to step up and fill the gap, but that didn’t happen.

Diabetes drug Bydureon, which Bristol Myers Squibb Co. (NYSE:BMY) and AstraZeneca plc (ADR) (NYSE:AZN) picked up in the acquisition of Amylin, produced sales of just $66 million in the second quarter. The drug, which only has to be injected weekly, was supposed to have much higher demand than the twice-daily formulation Byetta, which brought in $104 million in the second quarter. Eli Lilly & Co. (NYSE:LLY) selling back the drugs to Amylin might have been the pharma’s best move of 2011 — perhaps this decade — the company hasn’t had that many wins recently.

Investors also have high hopes for Eliquis, which Bristol Myers Squibb Co. (NYSE:BMY) sells with Pfizer Inc. (NYSE:PFE), but the drug managed just $12 million in the second quarter, down from $17 million in its first quarter of the launch. The lower sales are likely due to stocking in the first quarter, but even so, it’s clear Bristol-Myers and Pfizer are having a challenging time penetrating the heart-drug market. Eliquis has to compete with Bayer and Johnson & Johnson (NYSE:JNJ)‘s Xarelto and Boehringer Ingelheim’s Pradaxa, which had a year or more head start. Sales of Xarelto in the second quarter came in at $189 million in the second quarter, nearly four times as much as Johnson & Johnson and Bayer sold in the year-ago quarter, so there’s clearly a market for the drugs. Pfizer and Bristol-Myers just need to put a little more muscle into the marketing.

Changing expectations
Despite having gone nowhere with earnings — backwards actually — shares have increased more than 70% since the original long-term guidance was issued, trumping the S&P 500.

BMY data by YCharts