NEW YORK (CNN/Money) - Drugmaker Bristol-Myers Squibb Co. slashed its 2002 earnings forecast Wednesday, as poor performance of key products and excess wholesale inventories drove sales sharply lower.

Chairman and CEO Peter R. Dolan also said he will be taking direct control of the company's global pharmaceutical business effective immediately, calling Bristol-Myers' performance "unacceptable."

The stock plunged $4.20, more than 12 percent, to $33.50 after hours on Instinet.

Excluding certain items, Bristol-Myers said its 2002 earnings will be 25 to 30 percent lower than the $2.41 it earned last year. The company said its previous forecast overestimated sales for the year, mainly in its U.S. primary care business. Full-year earnings estimates now stand at $1.69 to $1.81 per share, down from earlier guidance of $2.25 to $2.35.

On top of that, Bristol-Myers said its plan to lower wholesale inventories by cutting shipments of drugs to wholesalers will lower its bottom line by an additonal 35 to 40 cents per share over the time of the reduction process.

In a conference call, Dolan would not give an exact time frame for the reduction process, but said it would try to "work it down as aggressively as (they) can over a rapid timetable."

Analysts had been preparing for a cut in guidance after the company said in its annual report that it sold too much to wholesalers last year. That was expected to hurt sales this year, but guidance on drug performance was not expected to change.

At most, analysts were looking for a cut of 20 cents per share for the year for inventory reduction.

Trevor Polischuk, analyst with Lehman Bros., called the cut "shockingly huge."

Dolan said in the conference call that Bristol-Myers believed in its business plan and guidance in December, but based on the trends of the early months of 2002 the company did a reappraisal.

He said predictions for the U.S. primary care business, "the delta" for its sales performance, "was found to be dramatically off track."

For the first quarter, Bristol-Myers now plans to earn 44 to 47 cents per share, including inventory reduction, down from consensus estimates of 56 cents.

In that quarter, combined sales for its cancer treatment product Taxol, diabetes drug Glucophage and anxiety treatment, all of which now face generic competition, are expected to be below $100 million compared to the $900 million they earned in the year-ago period.

"I'm focusing all of my energy and all of the company's energy on accelerating our growth rate," Dolan said.