Bristol-Myers Squibb (BMY), which intends to split-off its 83.1% holding in the Nutritional segment to concentrate on its core biopharmaceutical business, amended and extended the exchange offer regarding the Mead Johnson Shares. The Nutritional segment operates under its subsidiary Mead Johnson and develops infant formulas like Enfamil.

The company has increased its offer price to exchange up to 170 million shares of its Nutritional segment. The company also extended the expiry date of the offer to Dec 17 from Dec 14.

The split-off would enable Bristol-Myers to function as a fully independent biopharma company focusing exclusively on its pharmaceuticals segment, which manufactures and sells branded pharmaceutical drugs such as Pravachol for cholesterol reduction, Plavix for hypertension and Erbitux for cancer.

Plavix, the antiplatelet blood thinner indicated to reduce the risk of heart attack in patients with atherosclerosis, is the top growth driver for Bristol. However, patent expirations loom large on the company starting 2011 when Plavix is likely to face generics in the United States.

The company has lost patent protection on products worth about $4 billion in sales over the past four years. Drugs such as Cefzil, Paraplatin, Glucophage, Monopril and Taxol are also experiencing declining sales due to generic competition.  However, the $1 billion addition in cost cuts in 2012-2013, the extension of the Abilify agreement with Otsuka, and the acquisition of Medarex indicate that management is taking meaningful steps to prepare for the loss of exclusivity of Plavix.

Currently, we are Neutral on Bristol-Myers.

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