Bristol-Myers Squibb stumbled yesterday after unveiling a 33% drop in second-quarter net earnings to $667 million, triggered by favourable tax gains in the year-earlier period, on sales of $4.9 billion. But an unexpected criminal probe into its agreement with Canada's Apotex and partner Sanofi-Aventis for a generic version of the clot-buster Plavix (clopidogrel) has shaken the firm's foundations, with the situation dramatically escalating - reports the Wall Street Journal - after the Federal Bureau of Investigation raided the offices of B-MS' chief executive Peter Dolan.

Earlier this year, B-MS and Sanofi-Aventis joined forces with Apotex - against which they had previously filed suit for infringement of Plavix' patent ahead of its expiry in 2011 - under an agreement whereby the Canadian firm would agree not to launch a rival version before this time in return for an undisclosed sum - believed to be at least $40 million. However, such tactics have come under considerable scrutiny and criticism for being anti-competitive: Sanofi-Aventis and B-MS recently revised the agreement on concerns from the Federal Trade Commission, and this is still under review, but the companies learnt on Wednesday that they now face a criminal probe into the settlement by the antitrust division of the US Department of Justice. Such a move could weigh heavily on the stock price as investors have been keen to see a tie up that would see Plavix' earning potential protected.

But things are, at least, looking positive for B-MS' product pipeline, with Plavix, Abilify (aripiprazole) for schizophrenia, the oncology agent Erbitux (cetuximab) and the HIV therapy Reyataz (atazanavir) witnessing double digit growth over the last three months. Plavix reeled in a not insignificant $1.14 billion during the second quarter, hurdling the $1 billion mark for the first time from sales of $968 million in the same period last year, and jumping 14% in US prescription demand. Abilify too witnessed excellent growth, up 35% to $324 million with US prescription demand boosted 21%, while sales of Reyataz rose 29% to $236 million and Erbitux saw its fortunes improve 76% to $172 million.

But not so impressive were performances from the anticancer agent Taxol (paclitaxel), which plunged 20% to $149 million on increased generic competition in European markets, while the statin Pravachol (pravastatin) also suffered at the hands of copycat rivals following a US patent expiry in April this year that meant sales halved $323 million.

However, with four new product launches already this year in rheumatoid arthritis, cancer and in the antiviral arena - Atripla (efavirenz, emticitabine, tenofovir disoproxil fumarate), the RA therapy Orencia (abatacept), Baraclude (entecavir) for hepatitis B and the leukaemia treatment Sprycel (dasatinib) - BMS says it is looking forward to what it terms “a period of sustained sales and earnings growth over several years, beginning 2007,” which will be maintained by ploughing more money into R&D investment, new products and generating cost savings of $600 million a year from 2008.

B-MS is on track to achieve its full year earnings per share guidance of $1.15-$1.25 and says declines from once-major products that have reached the end of their patent life “will be more or less offset” by growth in the company's new products. But it's a hard toll to take - with estimated reductions of net sales in the range of $1.4-$1.5 billion over 2005's figures from products that were once cash cows for B-MS.