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Biotech / Medical : Biotechnology & Drugs -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ1065 who wrote (109)	7/11/2002 7:24:53 AM
From: SusieQ1065	Respond to of 232

SEC opens Bristol-Myers investigation By By Adrian Michaels in New York Jul 11 2002 04:00 US regulators are investigating whether Bristol-Myers Squibb, one of the world's largest pharmaceuticals companies, inflated its revenues by $1bn last year. Company officials have met the Securities and Exchange Commission to discuss the circumstances behind sales to drug wholesalers that boosted inventories to unsustainable levels. Regulators are asking whether the company gave inappropriate incentives to wholesalers to help meet 2001 earnings expectations. There is no suggestion at this stage that the company has acted improperly, or that the creation of excessive inventories was a deliberate attempt to inflate sales. The investigation is the latest to be launched by the SEC as it widens its assault on the financial practices of corporate America. On Wednesday a criminal investigation was launched into Qwest, the US telecommunications company already under SEC scrutiny over the way it booked revenues. Qwest said it had been told of the investigation on Tuesday by the US attorney's office in Denver, although it had not been told the subject matter of the inquiry. The SEC, the White House, Congress and business leaders are all attempting to restore investor confidence in the US financial statements following a series of scandals at companies such as Enron and WorldCom. The SEC would not comment on its inquiry into Bristol. Pharmaceuticals companies often deal with uneven demand from wholesalers, but executives say demand manipulation has long been an open secret in the industry. Such manipulation can be as easy as announcing a forthcoming price increase for a product and creating short-term demand as wholesalers buy the drug at its cheaper price. Analysts say the SEC could be changing its stance on some long-standing practices as it toughens its attitude towards financial malpractice. In April, Bristol admitted that wholesaler inventory levels "significantly exceed levels the company considers desirable". It said it was reducing shipments to lower inventories "to levels more consistent with market demand". Analysts, who say the inventory levels of all Bristol drugs had become unsustainable, estimate that sales for the 12 months from April will be reduced by about $1bn as the company cuts inventories. The reduction represents over 5 per cent of the $19.1bn that Bristol recorded in net sales last year. Bristol, which has said the reductions would cut earnings by 35-40 cents a share, confirmed yesterday that the SEC was making informal inquiries into its wholesaler sales. It said it was co-operating fully. Bristol has had a tough time over the last two years, hit by research and development failures and controversial deals, including its $2bn agreement with ImClone, the biotechnology company whose former chief executive has been charged with insider trading. Bristol's shares have almost halved in value this year alone. It warned at the end of last year that 2002 earnings could be well down on 2001. Its subsequent revelation about inventories lowered estimates even further. If the SEC inquiry led to a restatement of earnings, it would be another body blow to the company. In April, Peter Dolan, chairman and chief executive, took personal control of the group's global medicines division, replacing Richard Lane, who left the company. Additional reporting by Geoff Dyer.