INHX Inhibitex, Inc. (MM)

Bristol-Myers Squibb Co.'s (BMY) fourth-quarter profit surged 76% on lower tax provisions, while rising sales of anti-infective drugs and a new skin-cancer treatment helped lift revenue 7%.

But the results fell short of analysts' expectations due to weaker-than-expected sales of the blockbuster anti-clotting drug Plavix, as well as higher-than-expected spending on marketing, selling and administrative activities.

The New York drug maker predicted its full-year 2012 earnings-per-share would decline as much as 12% from 2011 due to the expected loss of U.S. patent protection for Plavix in May. Unfavorable currency-exchange rates are also expected to pressure full-year sales.

Bristol's share of sales of Plavix, one of the best-selling drugs in the world, is expected to plunge more than 60% to about $2.7 billion from $7.1 billion last year, the company said, as it's likely to face intense competition from cheaper generic copies. Bristol co-markets Plavix with Sanofi (SNY).

Bristol-Myers shares slipped 2 cents to $32.68 in recent trading.

Still, Chief Executive Lamberto Andreotti said he was optimistic Bristol will weather the patent loss for Plavix and other challenges such as pricing pressure by health payers. "We have the pipeline and culture and management team to go beyond those losses of exclusivity and deliver a successful future," he told analysts on a conference call.

Indeed, investors have largely viewed Bristol-Myers as a success story. Its shares have risen more than 25% over the past year because the company has had success developing new drugs to offset the patent loss for Plavix.

Bristol last year introduced new drugs including skin-cancer treatment Yervoy, and is expected to gain regulatory approval this year for a new blood thinner, Eliquis, which has big commercial potential.

Bristol's research-and-development victories followed a shift in strategy several years ago, when the company began shedding nonpharmaceutical assets and cutting costs. It used the proceeds to make targeted acquisitions and license deals to bolster its drug pipeline.

Most recently, Bristol agreed to acquire hepatitis C drug developer Inhibitex Inc. (INHX) for about $2.5 billion.

The company has had some R&D setbacks, including the U.S. Food and Drug Administration's recent decision not to approve experimental diabetes drug dapagliflozin because the agency wants more clinical data. Andreotti said Bristol was "very disappointed" with the agency's decision, but remains confident in the drug's risk-benefit balance and will work with regulators to continue to seek approval.

Some analysts shrugged off Bristol's lower-than-expected quarterly earnings and modest outlook for 2012. Deutsche Bank analyst Barbara Ryan said in a research note the company's "portfolio of promising new and emerging products should support sustained growth post Plavix patent cliff," while a dividend yield of more than 4% should limit downside for the stock.

For the fourth quarter, Bristol-Myers reported profit of $852 million, or 50 cents a share, up from $483 million, or 28 cents a share, a year earlier.

Excluding restructuring costs and other items, earnings for the latest quarter were 53 cents a share, below the mean estimate of analysts surveyed by Thomson Reuters of 55 cents a share.

One factor in the profit shortfall appeared to be a 22% increase in marketing, selling and administrative expenses, to $1.2 billion for the quarter. Bristol has signaled recently that it needs to spend sufficiently to support new product launches.

Helping profits was a decline in Bristol's effective tax rate to 22.8% from 40.4% a year earlier. Provisions for income taxes fell to $363 million from $571 million.

Fourth-quarter sales rose 7% to $5.45 billion, just short of the $5.5 billion Thomson estimate. U.S. sales were up 8%, while non-U.S. sales rose 4%.

Sales of Plavix dropped 3% to $1.67 billion. Some analysts had predicted Plavix sales in the range of $1.7 billion to $1.8 billion.

Sales of antipsychotic Abilify rose 4% to $737 million.

Combined sales of blood-pressure drugs Avapro and Avalide tumbled 23% to $195 million. These drugs also are due to lose U.S. patent protection this year.

Sales increased for HIV drugs Reyataz and Sustiva, and Baraclude for hepatitis B. Cancer drugs Erbitux and Sprycel also posted gains.

Sales of skin-cancer drug Yervoy, which went on sale last year, were $144 million for the fourth quarter.

Bristol's gross profit margin was 74.9% of sales, versus 72.3% a year earlier.

For 2012, Bristol expects earnings of $1.90 to $2 per share, compared with $2.16 per share for 2011. The forecast assumes full-year sales of $17.2 billion to $18.2 billion, compared with $21.2 billion for 2011.

For 2013, Bristol-Myers still hopes to post earnings of at least $1.95 a share, excluding certain items, said Chief Financial Officer Charles Bancroft.

-By Peter Loftus, Dow Jones Newswires; 215-982-5581; peter.loftus@dowjones.com

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