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Bristol-Myers Squibb to Cut Costs by $500 Million
Delays in developing the Type 2 diabetes medication “Pargluva” (muraglitazar) have forced Bristol-Myers Squibb (BMS, New York, NY, www.bms.com) to reevaluate its productivity plans to reach a minimum of $500 million in savings by 2007.
So far, the company has cut costs by an estimated $200 million in 2004 and 2005 by reorganizing its US and European sales forces, restructuring its pharmaceutical development division, and outsourcing its information technology division.
"We continue to examine our operating model to focus resources and work on high-value priorities," stated Peter R. Dolan, chief executive officer of Bristol-Myers Squibb in a release. "We intend to simplify and streamline business processes, governance and decision-making, and we expect to build new capabilities to execute our strategy over the long term."
According to the company, “Pargluva” will not contribute to the company’s near-term revenue and earnings. The drug was put on hold in October after FDA officials notified the company, and its collaborator Merck, that it would require substantial safety data before the drug could be put on the market. With fears that the drug would take approximately five years to approve, BMS said that it has chosen to look at other options and might even terminate the product's development.
BMS did not specify where cuts would be made, but noted that the number of sales representatives had been reduced by 30% over the past five years. “Now that Pargluva will not be part of the portfolio in the near term, the company is considering a range of options to utilize this freed up capacity within the sales force,” the release stated.