Bristol-Myers Squibb: Wounded and Vulnerable

After three successive blows, Wall Street analysts say BMS, the fifth largest global pharma company, could be a takeover target. First came FDA's refusal to review the data for Erbitux (IMS 255), BMS and ImClone's joint cancer treatment candidate in which BMS has invested more than a billion dollars. Two months later, the company announced that next year's earnings might be only half that of this year. Disappointed stockholders unloaded in droves, driving the price down nearly 15 percent. And to top it off, the board of directors has put CEO Peter Dolan on notice: one more stumble and he's out.

All of which makes the company ripe for a hostile takeover. According to Wall Street Journal reports, one analyst predicts: "Six months from now, we won't have a Bristol-Myers Squibb." So far, takeover speculation centers on four companies: GlaxoSmithKline, which wants to boost its cardiovascular franchise, in which BMS has good strength; Sanofi-Synthelabo, which co-markets two big-selling products with BMS; Novartis, which has said in the past that it is prepared to make a large acquisition to expand its US presence; and Pharmacia, which could use BMS' cancer products to bolster its growing cancer franchise.

Pharmacia, which merged with Monsanto in early 2000, has its own troubles and has also become the subject of takeover speculation. FDA recently delayed approval for two of its products, and the company's Celebrex (celecoxib) sales peaked early because of unexpected cardiovascular concerns. The good news is that Pharmacia isn't facing any looming patent expirations, and would, therefore, be a good candidate for a merger. BMS-Pharmacia anyone?