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Mead Johnson.

How will Evansville's pharmaceutical operation fare following the Bristol-Myers and Squibb merger?

In Evansville, an old division of an even older company is sporting a new name. As of Jan. 1, BristolMyers U.S. Pharmaceutical and Nutritional Group is now-take a breathBristol-Myers U.S. Pharmaceutical & Mead johnson Worldwide Nutritional Group.

The lengthy monicker is the most obvious change in the Evansville operations of BristolMyers since the New York-based pharmaceutical giant announced its merger with Squibb Corp. last July. That deal, based on the tax-free exchange of stock, created BristolMyers Squibb Company. It also created the second-largest pharmaceutical concern in the world, valued at $27 billion at the time of the merger announcement. Only Merck & Co., Inc., sells more pharmaceuticals.

Bristol-Myers came to Evansville in 1967 when it acquired Mead johnson & Company, best known for its Enfamil and ProSobee infant formulas and Visol line of vitamins. The Evansville operation was Bristol-Myers' largest in the United States, with 3,200 employees devoted to marketing, sales, manufacturing and research. As part of BristolMyers Squibb, the Evansville site's size is comparable to Squibb's headquarters in Princeton, N.J.

Edward Mead Johnson, Sr., a founder of Johnson & Johnson, moved Mead Johnson & Company to Evansville from New Jersey in 1915. Among the young pharmaceutical and nutritional company's most important products was Dextri-Maltose, one of the first commercial infant formulas. in 1933, Mead Johnson introduced Pablum, the only infant cereal on the market at the time. When it merged with BristolMyers in 1967, Mead Johnson & Company's biggest products were infant formulas and cereal, birth control pills and Metrecal diet foods.

There's been little news of how, other than the name change, the merger might affect the Evansville division. One tidbit came in November, when the company announced that it would consolidate all nutritional operations in Evansville. The consolidation, which includes the transfer of Squibb's small nutritional products group from New York, affects fewer than 50 employees, according to Rolland Eckels, director of public affairs for Bristol-Myers U.S. Pharmaceutical & Mead Johnson Worldwide Nutritional Group. Most of the transferees will be executives involved in international marketing of nutritional products.

Other than that, Eckels says, "We have no idea how the merger will affect Bristol-Myers in Evansville. We just don't know yet." Still, Eckels expects changes. 'Obviously, any time you put two large organizations together you have to do some reorganization," he says. But, he adds, That is evolving slowly and isn't going to be done in haste."

Signs are that the evolution should be graceful. For one thing, the transition of power between the two companies' chairmen and chief executive officers, longtime friends Richard L. Gelb of Bristol-Myers and Richard M. Furlaud of Squibb, has been bloodless. Gelb continues as chairman and CEO of Bristol-Myers Squibb. Furlaud is giving up those titles to become the new company's president and to oversee the combined business.

Other arrangements also seem amicable. Bristol-Myers gets to choose 60 percent of the new board; Squibb picks 40 percent. Squibb will market its products under its own name and keep its operations in their current locations.

But the merger has suffered one major casualty. A week after being named to the board of Bristol-Myers Squibb, Jan Leschly, president of Squibb Corp., resigned. While acknowledging the value of the merger to employees and stockholders, Leschly said: "The personal goals that I hoped to achieve at Squibb as an independent company are not realistic within the same time frame with Bristol-Myers Squibb."

Leschly was considered a top contender to succeed 65-year-old Gelb when he retires. That post now may fall to Evansville native Wayne A. Davidson, former president of Mead Johnson who was named president of Bristol-Myers Squibb's Pharmaceutical & Nutritional Group on Jan. 1. Davidson now is responsible for the company's worldwide pharmaceutical and nutritional business.

Perhaps most important to the success of the new union is that the two firms' strengths "dovetailed exceptionally," says Gelb. Squibb has drugs that should be ready for market soon, while Bristol-Myers' research effort, revitalized in the early 1980s, won't yield fruit for several more years.

With its Bufferin, Nuprin and Excedrin pain relievers and Comtrex cold medicine, Bristol-Myers is a pro at marketing non-prescription medications, a skill that will be a big help when Squibb develops over-the counter versions of its prescription drugs. Squibb has a more vigorous research and development program, but is weak in areas where BristolMyers is strong: cancer treatments and central nervous system drugs. And although Squibb is the faster-growing mate, it needs Bristol-Myers' research and marketing power to maintain its pace. "There are many good things that are going to come out of this," says Squibb's Furland in BristolMyers Squibb's third-quarter report for 1989. "The thing that excites me the most is that this combined company will have greatly enhanced capabilities to develop breakthrough pharmaceutical products."

While the Bristol-Myers Squibb match is notable for its synergy, it's nothing unique these days. In 1988, Eastman Kodak Co. bought Sterling Drug, Inc., for $4.1 billion. Last year, Beecham, Inc., picked up Smithkline Beckman Corp. for almost $8 billion, Dow Chemical Co. purchased two-thirds of Marion Laboratories, Inc., and American Home Products Corp. bought star-crossed A.H. Robins Co., Inc., for $3 billion.

Why the surge in mergers? "The pharmaceutical industry, despite the size of some of these companies, is a very fragmented business,' explains Larry Beisel, an investment broker in the Evansville office of A.G. Edwards & Sons. "There's not one company you can look at, if you go beyond one market segment, and say that's the dominant company."

Although a company may corner the market for one type of drug, Beisel says, "When you look at all the different prescription and over-the-counter medications, it's very difficult to point to one firm and say, That's the one that's got the lock on the business."' So the pharmaceutical companies have been consolidating, pooling their research and marketing strengths to be competitive.

Among the newly merged pharmaceutical companies, Bristol-Myers Squibb is one of the fastest-growing. For the third quarter of 1989-the last quarter before the merger was approved in October-both companies had record sales and earnings. Combined 1988 sales for the two companies were $8.6 billion-about half from pharmaceuticals. Their combined net income in 1988 was $1.3 billion.

Ultimately, given the vigor and experience of the new mates, the marriage of Bristol-Myers and Squibb should bring prosperity to the company and its subsidiaries. Sums up Furland: Bristol-Myers Squibb will be a company with the financial stability, the product base, the critical mass in research and the worldwide market reach to excel in what will be a rapidly changing and increasingly global health-care market in the coming decade."
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Title Annotation:now Bristol-Meyers U.S. Pharmaceutical & Mead Johnson Worldwide Nutritional Group, manufactures of baby foods
Author:Hynes, Erin
Publication:Indiana Business Magazine
Article Type:company profile
Date:Feb 1, 1990
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