Bristol-Myers Squibb on Wednesday disclosed it was the target of a US federal criminal investigation over drug sales to wholesalers. The US pharmaceuticals company is already under investigation by the Securities and Exchange Commission.
On Wednesday the company said it would co-operate with both investigations and provide the US attorney’s office in New Jersey, an offshoot of the Department of Justice (news – web sites), with the information it had given the SEC.
Regulators have held meetings with company officials since April over the circumstances behind sales last year that raised distributors’ inventories to unsustainable levels.
Investigators want to know if Bristol improperly accounted for the sales to meet earnings targets. Analysts estimated the extra sales at $1bn-$1.5bn (Â£645m-Â£960m). The company says it believes its accounting treatment of the wholesaler inventory build-up was appropriate.
The company has been trying to work down the excessive inventory levels but recently said in its second-quarter regulatory filing that the process would take longer than expected. It now expects to take all next year rather than finishing in the year’s first quarter. The investigations mean the company may have to restate past earnings.
On Wednesday Bristol said its plan to work wholesaler inventory down “to more desirable levels” continued to progress well.
Bristol’s shares have fallen more than 60 per cent in the past year. They closed down 3.13 per cent on Wednesday at $21.63.
The company has faced a barrage of problems in recent years. Apart from losing patent rights for some of its top-sellers such as Taxol, its cancer drug, and Glucophage, its diabetes treatment, it has also had difficulties getting approval for new drugs.
Much depended on Vanlev, a hypertension drug, which cost millions to develop and test but encountered repeated problems. The company head of research and its chief financial officer both quit this year.