Drug maker lowers profits by nearly $1 billion because of sales practices

<br>NEW YORK (AP) _ Bristol-Myers Squibb Co. lowered its profits by nearly $1 billion Monday for 1999 through 2001 because of questionable sales practices now under investigation by prosecutors and regulators.

Tuesday, March 11th 2003, 12:00 am

By: News On 6

NEW YORK (AP) _ Bristol-Myers Squibb Co. lowered its profits by nearly $1 billion Monday for 1999 through 2001 because of questionable sales practices now under investigation by prosecutors and regulators.

At issue is a program of sales incentives the drug maker set up for wholesalers. The program was created to boost sales and meet revenue and earnings projections, but it left wholesalers with swollen inventories.

The pharmaceutical company restated its earnings for 3 1/2 years, lowering its profit from continuing operations by $900 million and sales by $2.5 billion for the years 1999, 2000 and 2001. But it raised profit by $200 million and sales by $653 million for the first six months of 2002.

The Securities and Exchange Commission and federal prosecutors are investigating the sales practices. Monday's disclosures could also lead to a flood of new lawsuits from shareholders angry that the company deceived them.

Other companies that have either restated their earnings or announced their intention to do so because of questionable practices include AOL, WorldCom and Dynegy.

Bristol-Myers also reported Monday that earnings last year were down sharply from the year before. It earned $1.9 billion, compared with $4.9 billion in 2001. Sales edged up to $18.1 billion from $17.99 billion.

Bristol-Myers was up 2 cents to $22.82 in late morning trading on the New York Stock Exchange.

At the heart of the company's problems are patent expirations. Bristol-Myers moved aggressively to pump up sales because it knew in 2000 and 2001 it was losing market exclusivity for three of its best-selling products: the cancer drug Taxol, the diabetes drug Glucophage and the anti-anxiety medication BuSpar.

Bristol-Myers filed new patents and lawsuits to stall generic competition for the drugs. The maneuver resulted in a rash of lawsuits accusing the company of antitrust violations.

Late last year, it announced a $670 million preliminary agreement to settle the cases. Part of the agreement was made final Friday.