The entrance of a generic competitor can have disastrous effects on a pharmaceutical company's top and bottom lines, even if the generic version is only on the market for a short time. Unfortunately for shareholders of Bristol-Myers Squibb (NYSE:BMY), the fourth quarter appeared to be another one dominated by the effects of the temporary introduction of a generic version of the heart disease drug Plavix.

On Thursday, Bristol-Myers reported lower fourth-quarter sales and earnings numbers compared to a year ago. Revenue for the quarter was down 16% to $4.2 billion. Sales of its top product, Plavix, were more than cut in half, coming in at only $500 million in the fourth quarter compared to more than $1 billion last year.

Earnings took a big hit from a one-time $350 million charge related to a pricing and marketing scandal that the company has settled with the Department of Justice. Absent this and other one-time charges, net earnings for the quarter would have come in at $380 million, or $0.19 a share.

Aside from its HIV treatments, Rayataz and Sustiva, BMY's other top products are either already facing generic competition or have potent competitors that may nibble away market share over time. Sales of pharmaceutical drugs dropped nearly 25% this quarter, to $3.1 billion, and not all of this fall can be blamed on Plavix.

Ultimately, BMY's future prospects for the next couple of years are held up in the courts as it awaits a decision on the validity of its Plavix composition of matter patent. The good news for BMY shareholders is that it expects the stock of generic Plavix to be gone by early in the second quarter and for Plavix sales to be up again this year. The bad news is that, even if the Plavix composition of matter patent is upheld, the patent expires in 2011 anyway, and Bristol-Myers still has nothing in its pipeline to completely fill the void in sales that will occur. Furthermore, BMY is facing potentially millions more in damages that the government may ask for as part of any potential settlement over its first agreement with Apotex to keep generic Plavix off the market.

At least BMY has guided for 2007 to be a better year than 2006, with estimates for earnings per share to be up at least 10% over last year, to $1.20 per share. This returning to growth at last is not enough to get me excited over BMY, though, especially considering how far net income has fallen from the $1.50 a share it made back in 2005 and the fact that any investment in BMY today has so much riding on an unpredictable court decision.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.