FREE ESSAY ON BRISTOL-MYERS SQUIBB

BRISTOL-MYERS SQUIBB

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.
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