Bristol-Myers Squibb finished the fourth quarter of 2012 with an 8.6% rise in net income thanks to a tax benefit connected with BMS-986094, its failed drug candidate for Hepatitis C—but the company saw sales plunge 23% as generics took sales away from two key drugs that lost patent protection last year.

BMS saw its net income climb to $925 million, or $0.56 per share, in Q4 2012 compared to $852 million, or $0.50 per share, in the year-ago quarter. The company was aided by a capital loss deduction of $392 million for BMS-986094 after taking a $1.83 billion impairment charge for the failed drug candidate.

BMS-986094 (formerly known as INX-189), was a nucleotide polymerase (NS5B) inhibitor designed to fight hep C. BMS stopped a Phase IIb study of the drug following the heart failure death in one patient who received the highest daily dose, 200 mg, in combination with BMS’ daclatasvir, another hepatitis C drug candidate. 

Q4 net sales shriveled to $4.191 billion from $5.454 billion in the final three months of 2011.

For all of 2012, BMS saw its net income shrivel by about half from the previous year, down to $1.96 billion from $3.709 billion in 2011, while net sales fell 17%, to $17.621 billion from $21.244 billion.

BMS’ CEO Lamberto Andreotti, however, termed 2012 a transition year as the company focused on winning regulatory approvals for new products, planning new product launches, growing existing brands, and rebuilding its R&D pipeline.

“In 2012 we continued to effectively execute our strategy, and continued to build the post-Plavix portfolio and operating structure that provide a solid foundation for our future growth,” Andreotti said in a statement.

During the fourth quarter, BMS won FDA marketing authorization for Eliquis®, a drug designed to reduce the risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation. Eliquis also won approval for the indication in South Korea earlier this month, in Japan and Canada last month, and from the European Commission (EC) in November. BMS co-developed and co-commercialized Eliquis with Pfizer.

The EC also granted marketing authorization to Forxiga® for type 2 diabetes. The drug was co-developed and co-commercialized with AstraZeneca.

BMS envisions Eliquis and Forxiga as linchpins of its future portfolio, as the company looks to replace revenue lost since patent protection for Plavix ended in May 2012. Worldwide net sales of the drug all but collapsed last year to $49 million, from $1.672 billion in 2011. Most of that collapse occurred in the U.S., where sales cratered to $20 million in ’12 from $1.582 billion a year earlier.

Excluding Plavix and the drug Avapro/Avalide—used for treating high blood pressure and kidney problems caused by diabetes—BMS said its net sales grew by 13% in Q4 2012 compared to Q4 2011. Avapro/Avalide sales tumbled by more than half last year, to $84 million in the final three months of 2012, from $195 million a year earlier.

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