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Bristol implant write-off looms
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November 16, 1998: 11:39 a.m. ET
Pharmaceutical giant takes $400M to $500M 4Q charge for silicone, other suits
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NEW YORK (CNNfn) - Pharmaceutical heavyweight Bristol-Myers Squibb Co. said Monday it expects to take a charge ranging from $400 million to $500 million in its fourth quarter primarily to cover lawsuits by women claiming they were injured by leaky silicone-gel breast implants.
The announcement by Bristol-Myers, the New York-based manufacturer of Excedrin pain reliever, Clairol hair color and the Sea Breeze skin care line, prompted Moody's Investors Service to confirm the Aaa long-term debt and Prime-1 commercial paper ratings of Bristol and its affiliates.
In a press release Monday, Bristol-Myers said the charge, after the impact of insurance and taxes, would allow it to augment the reserve for breast-implant liability and cover costs associated with prescription drug litigation.
The breast-implant component of the charge, Bristol-Myers said, is expected to be between $375 million and $435 million after the effect of taxes and additional insurance recoveries.
The charge covers anticipated payments on breast-implant cases stemming from a global settlement in 1995. It also covers cases whose resolutions are pending for women who opted out of the settlement.
Citing a 1995 study by the Food and Drug Administration, Bristol-Myers has contended that the risks of a woman developing cancer from a faulty polyurethane breast implant are "at most one in 1 million."
The FDA repeated its position on the safety of silicone implants in 1997.
In October, Bristol-Myers said a judge in an Albuquerque, New Mexico silicone case had returned a favorable verdict for the company. The judge rejected a plaintiff's allegation that the implants she received following breast reconstruction caused complications and emotional distress.
Judges had found for Bristol-Myers in five previous cases involving breast implants dating back to Jan. 1996.
The latest moves come less than a week after Bristol-Myers reshuffled its leadership, tapping Donald Hayden to head its pharmaceutical business.
Hayden, 42, will replace Kenneth Weg, 60 who plans to retire in 2000.
Analysts viewed the reorganization as an effort by Bristol-Myers to put their top guns in the high-margin pharmaceutical division.
Bristol-Myers' principal business are pharmaceutical, consumer products, nutritional products and medical devices.
The company has embarked on several cooperative ventures recently to develop its research in cardiovascular treatments and cholesterol-reducing and anti-cancer drugs.
Shares of Bristol-Myers (BMY) were up 1 at 112-1/16 early Monday on the New York Stock Exchange.
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Bristol-Myers
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