Bristol-Myers Squibb (BMS) plans to cut costs by at least $500 million in 2007 as part of a strategy to improve earnings growth and offset anticipated losses from its recent setback in the development of its key investigational diabetes drug Pargluva.
The 2007 cost reductions will build on the estimated $200 million in annual cuts that it achieved in 2004 and 2005, the company said recently. The cost cuts will occur primarily through "new productivity plans," above and beyond those implemented during the last two years, BMS said. A company spokesman declined to elaborate on the exact nature of the cuts.
BMS' announcement comes six weeks after it encountered a major setback on Pargluva (muraglitazar), a potential blockbuster diabetes drug that was considered one of the most important drug candidates in the company's pipeline. BMS announced Oct. 27 it is contemplating terminating development of Pargluva after determining that it could take up to five years to compile additional safety data requested by the FDA.
Pargluva's future was put in jeopardy when BMS and its development partner, Merck, received an FDA "approvable" letter for Pargluva, requesting additional information regarding the drug's cardiovascular safety profile. Pargluva is a dual alpha/gamma PPAR (peroxisome proliferator-activated receptor) activator -- a new type of drug intended to regulate blood sugar while also improving fat levels in the blood.
"The company's continued focus on reducing expenses is even more imperative, given the recognition that Pargluva will not contribute to the company's near-term revenue and earnings," BMS said. The firm added that it is considering a range of options for Pargluva, including conducting additional clinical studies to satisfy the FDA's request or terminating development of the drug.