Bristol-Myers Squibb paid the penalty for failing to prevent the manufacturer of a generic version of its Plavix blockbuster from flooding the US market with its copycat version with a dramatic slump in third-quarter sales and profits.

But the company said the impact of the competition to Plavix (clopidogrel), an antithrombotic that was the second best-selling drug in the world before the generic arrived, would start to dissipate in the first quarter of next year.

Overall, revenues came in at $4.15 billion in the third quarter, down 13%, while earnings from continuing operations were $338 million or 17 cents a share, down from $964 million or 49 cents a share a year ago.

Third-quarter sales of Plavix plunged 36% to $630 million due to competition from a generic made by Apotex, which launched its product in August after US lawmakers invalidated a ‘sweetheart’ deal with B-MS that aimed to keep the copycat off the shelves until 2011.

B-MS won an injunction to take it off the market shortly afterwards, but not before Apotex had shipped vast quantities to distributors. The debacle led to the dismissal of chief executive Peter Dolan and interim CEO Jim Cornelius said on a conference call the search for a new leader had begun.

The lingering effects of Apotex’ competition will extend right through to the start of a patent infringement between the two companies, due to start in New York on January 22.

Analysts said the decline in Plavix sales was not as bad as expected, and this view tied in with B-MS’ decision to upgrade its financial forecasts for the year to $0.97-$1.02 per share, having cut its forecast to $0.95 in September.

Cornelius also said on the call that B-MS was not a takeover candidate, as some analysts have suggested, insisting that it has a ‘wonderful future as an independent company,” pointing to recent and upcoming product launches such as Sprycel (dasatanib) for chronic myeloid leukaemia, Orencia (abatacept) for arthritis and Baraclude (entecavir) as evidence of its growth potential.

B-MS is also seeing a fall-off in sales of cholesterol-lowerer Pravachol (pravastatin) after it lost patent protection in the US in April, and revenues for this product fell 64% to $192 million.

On a more positive note, sales of cancer drug Erbitux (cetuximab) swelled by 64% to $175 million and antipsychotic Abilify (aripiprazole) increased 20% to $233 million.

The firm’s HIV franchise also made a solid contribution, with revenue from Sustiva (efavirenz) up 18% to $201 million and Reyataz (atazanavir) growing 32% to $233 million.