Introduction and Executive Summary:
This document provides an overall business review for the pharmaceutical company Bristol-Myers Squibb. Although not a complete summary of their 1998 business dealings or strategy, it gives an overview of three fundamentally sound aspects of any business, especially a Fortune 500 business. This document starts by covering the marketing aspect of Bristol-Myers Squibb. Firstly, it covers the most important structure of any company: its product. Inside, there is information on how they distribute their product and where they distribute it. Finally, it shows how they promote their product and the ways in which they advertise it.
Management is the next topic of discussion. What style of management does Bristol-Myers Squibb conduct? The document talks about compensation given to their employees and how the average employee is rewarded for achieving an exceptional level of excellence. Finally, the document focuses on finance. It shows Bristol-Myers Squibb’s profits, debts, how much money is invested in the company, and the direction that the company is headed.
Once again, this document is not a complete breakdown of Bristol-Myers Squibb’s 1998 business transactions. All this document aims to do is give an idea of the extreme complexity of the business world, understand (at least a little more) the strategy and competitiveness between companies, and perhaps enlighten a few on how much time and effort goes into such a giant of a company like this. Enjoy.
History:
Bristol-Myers:
In 1887, William McLaren Bristol and John Ripley Myers decided to invest $5,000 into a failing drug manufacturing firm called the Clinton Pharmaceutical Company, located in Clinton, New York. The company was officially incorporated on December 13, 1887, with William Bristol as president and John Myers as vice president.
In May 1898, a new name was adopted: Bristol-Myers Company (a hyphen replaced the original comma after Myers’s death in 1899 when the company became a corporation).
The post-war depression prompted Bristol-Myers to abandon its ethical drug business and devote itself entirely to its specialties, its two big winners, and a dozen or so assorted toiletries, antiseptics, and cough syrups. Company headquarters were established in Manhattan, where it has remained ever since. Having shifted squarely into the consumer products arena, Bristol-Myers began advertising its products directly to the public.
In 1924, gross profits topped $1 million for the first time in Bristol-Myers’ history. The company’s products were on sale in 26 countries. At this point, the shares held by John Myers’s heirs became available for sale, triggering a series of moves that turned Bristol-Myers into a publicly held company, listed on the New York Stock Exchange in 1929.
In 1943, Bristol-Myers bought Cheplin Biological Labs and quickly entered into the field of antibiotics. During the war, Bristol-Myers was a major distributor of penicillin and other types of antibiotics. By the end of the war, it was clear that penicillin and other antibiotics represented an immense opportunity for the company. Cheplin was renamed Bristol Laboratories, and Frederic N. Schwartz was put in charge of it. In 1957, Schwartz was appointed president and chief executive officer of Bristol-Myers when Henry Bristol chose to shed some of his former responsibilities and become chairman of the board.
Reviewing the company’s situation and prospects, Schwartz and then treasurer Gavin K. MacBain — later Schwartz’s successor as CEO — decided that Bristol-Myers should embark on a program of acquiring well-managed smaller companies. The two executives’ first major move in that direction was to acquire Clairol. Within a dozen or so years after Clairol joined the company, a number of other acquisitions followed, including those of Drackett, Mead Johnson, Zimmer, and Westwood. In 1986, the company opened a state-of-the-art research complex in Wallingford, Connecticut, designed to house more than 800 scientists and support staff. In January 1994, Charles A. Heimbold, Jr., was elected chief executive officer. In 1995, Heimbold also became chairman.
Squibb: In 1856, Edward Robinson Squibb founded a pharmaceutical company in Brooklyn, New York, dedicated to the production of consistently pure medicines, like ether and chloroform. In 1905, the company was sold to Lowell M. Palmer and Theodore Weicker, and the company became incorporated. That same year, land was purchased at New Brunswick, New Jersey, for the establishment of an ether production plant. In 1938, the Squibb Institute for Medical Research was established. In 1944, Squibb opened the largest penicillin production plant in the world: Building 59 in New Brunswick, New Jersey. In 1971, Squibb Corporation established worldwide headquarters and expanded facilities for the Squibb Institute in Princeton, New Jersey.
The Merger: In 1989, Bristol-Myers merged with Squibb, buying them out for $12.7 billion. This merger created a global leader in the healthcare industry. The merger created what was then the world’s second-largest pharmaceutical enterprise. In 1990, the Bristol-Myers Squibb Pharmaceutical Research Institute was established with headquarters in Princeton.
Marketing: Bristol-Myers Squibb provides services for people in need of health products. Although Pharmaceuticals are their top-grossing product, the breakdown can be seen as: Medicines, Beauty Care, Nutritionals, and Medical Devices. Bristol-Myers Squibb performs most of their sales in Medicines, approximately 69% of the gross income, or $12.7 billion. They specialize in mainly six types of prescription drugs, which are: Cardiovascular – Pravachol, Capoten, Monopril, Anti-cancer – Taxol, Paraplatin, Vepesid, Anti-infective – Zerit, Cefzil, Amikin, Central nervous system – Buspar, Serzone, Stadol NS, Analgesics – Excedrin, Bufferin, and Other – Comtrex (cold reliever), Dovonex (psoriasis), Keri (moisturizing body lotion). Beauty Care is another aspect of Bristol-Myers Squibb. In 1998, their Beauty Care department grossed $2.3 billion, or 12% of their total sales. Some products that are made by Bristol-Myers Squibb are.
This subsidiary of Bristol-Myers Squibb comprises 10% of their gross income, or $1.86 billion. Mead Johnson Nutritionals, Viactiv, and Enfamil Medical Devices are their last categories. This division of the company accounts for 9% of their annual income, or $1.6 billion. Zimmer Orthopaedics, ConvaTec Ostomy care, and Place/Distribution are also part of Bristol-Myers Squibb. It is an international company with its world headquarters located in New York, New York. The headquarters for the company’s segments are listed as follows: Medicines world headquarters in Princeton, New Jersey; Beauty Care in Stamford, Connecticut; Nutritionals in Evansville, Indiana; Medical Devices in Warsaw, Indiana and Skillman, New Jersey. Bristol-Myers Squibb manufactures products at forty-three major worldwide locations with a floor space of roughly 12,950,000 square feet. Forty-one are owned by Bristol-Myers Squibb, and two are leased. The geographic location of the company is as follows.
Earnings before taxes were $4,268, $4,482, and $4,013 respectively.
Promotion/Advertising: The pharmaceutical products and medical devices segments of Bristol-Myers Squibb are promoted at a national and international level through medical journals and direct outreach to medical professionals. Direct-to-consumer advertising is also utilized for some of its products. Bristol-Myers Squibb advertises most other products on television, radio, print media, window and in-store displays, and consumer offers. None of the segments solely depends on one or a few customers, so the loss of a customer should not have a significant adverse effect on the segment.
Management/Human Resources: Bristol-Myers Squibb uses centralized/pyramid management. A Board of Chairmen elects officers of the company to serve out a term. The company is headed by a CEO, followed by a CFO, and so on. Assigned personnel are placed in individual aspects of the company and are put in charge of these divisions, only to answer to their superiors. Their international subsidiaries are maintained by appointed personnel who control their subsidiary but also answer to a superior.
Training and Development: Bristol-Myers Squibb conducts training programs internally and externally. Internally taught programs include competency development, coaching and feedback, and management orientation. Management orientation offers support, guidance, information, and opportunities to network and share with other new managers. Key Manager/Executive Integration helps the transition into leadership roles. The Global Leadership Development Program helps managers increase their effectiveness in meeting global challenges. Management Forums are facilitated by senior management to encourage information sharing and creative problem-solving across divisional and functional boundaries.
External training is also encouraged at Bristol-Myers Squibb, and tuition reimbursement programs are effective for all eligible employees, providing up to 100% of the cost of the class or classes attended. Creative thinking is also encouraged, and the company spends $1.6 billion on research and development each year to discover new medicines. Bonuses are awarded annually (and even quarterly in some instances) to employees who exceed expectations.
Stock options are given to every employee at the company through their program entitled TeamShare, although stock options become higher if performance levels are high. Annual raises are also given to each employee, and the amount raised in the employee’s salary depends upon their performance. Once a year, the President’s Award is given to the employee who has achieved the highest level of excellence in the company. One outstanding employee, nominated by their manager, receives a performance review by the company to compare with other employees in the same situation. The winner of the award receives a cash prize.
Bristol-Myers Squibb believes in good labor relations, and although all benefits for employees are only for non-unionized employees, the company makes it so that no union has a need to come about. Some programs enacted for the employees include competitive wages with other companies, annual bonuses, annual raises, and the TeamShare program, which allows employees the option of purchasing stocks from the company. Although no special labor laws are practiced in the company, Bristol-Myers Squibb expects their employees to maintain the highest level of quality that is possible. Annual performance reviews are done on most of their employees, and on-the-job training is given to those who need extra support.
In 1998, Bristol-Myers Squibb recorded sales of $18.3 billion, about $1.5 billion more than in 1997. Bristol-Myers Squibb finished with a gross profit of $4.3 billion. At the end of 1998, the company’s market value exceeded $133 billion, making Bristol-Myers Squibb one of the top 15 publicly traded companies worldwide in terms of market value.
