I Don't Need No Massive Merger

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Bristol-Myers Squibb (NYSE: BMY) just keeps chugging along.

It's facing a major loss of revenue when Plavix, which it sells with sanofi-aventis (NYSE: SNY), faces generic competition in the U.S. in 2012, but until then things are looking pretty good. Sales of the blood thinner were up 8% for the third quarter, despite new generic competition in Europe. Clearly, Eli Lilly's (NYSE: LLY) new, competing blood thinner, Effient, isn't doing much damage to Plavix sales.

Overall, Bristol-Myers' revenue was up just 4% for the quarter, but that was dragged down because Bristol-Myers records a smaller fraction of sales from Mead Johnson Nutrition (NYSE: MJN), since it owns less of the company after the IPO earlier this year. Sales of biopharmaceuticals were up 6% year over year.

Adjusted earnings per share were up 16%, which excludes a gain (you've got to love the vagaries of GAAP) for acquiring partner Medarex, among other things. Bristol-Myers is doing well with its initiatives to decrease costs before the revenue starts falling. In fact, the company actually shrank selling, general, and administrative expenses year over year, even though revenue increased.

Going forward, the drug to watch is diabetes treatment Onglyza, which Bristol-Myers is marketing with AstraZeneca (NYSE: AZN). It's in the same class as Merck's (NYSE: MRK) blockbuster Januvia, but how much of the market it'll be able to take remains to be seen. As far as I can tell, Onglyza doesn't seem to offer much of an advantage over Januvia, and it has a long ways to go to reach blockbuster status, having only $20 million in sales after being launched in August.

Even after the Medarex acquisition, Bristol-Myers has plenty of cash to make additional acquisitions and still pay its massive dividend, which sits above 5%. The acquisitions won't save the company from inevitable revenue declines when Plavix's patent expires, but at least investors will get paid well to see how Bristol-Myers can adapt. So far, so good.