Bristol-Myers' Smart Moves

Bristol-Myers Squibb (NYSE:BMY) still has its problems, but the pharmaceutical outfit is making some strategic moves that should help position it for a brighter future.

Late last week, The Associated Press reported that Bristol-Myers signed a multiyear agreement with Accenture (NYSE:ACN) to outsource certain operations, including information technology, finances, and human resources. Details of the agreement are still being hammered out, but it could translate into significant savings in time and money for Bristol-Myers over the long haul. Last year, Wyeth (NYSE:WYE) outsourced its clinical data management operations to Accenture in a deal that requires the consulting firm to achieve significant efficiency improvements, according to the Bio/Pharmaceutical Outsourcing Report.

With respect to its drug portfolio, Bristol-Myers may have a few promising compounds in its pipeline. In the near term, the firm is working hard to protect current assets. Bristol-Myers is trying again to bring its cholesterol-lowering medication, Pravachol, to the over-the-counter market. Moving Pravachol to the drugstore shelf would probably better preserve sales of the medicine, whose patent expires in 2006. Although the company failed to persuade the Food and Drug Administration to allow OTC sales of Pravachol four years ago, there is some reason for optimism, particularly since Britain has approved Merck's (NYSE:MRK) Zocor for use without a prescription.

Unfortunately, Bristol-Myers faces a daunting challenge on patents related to its fast-selling Plavix, a blood-thinning medication. Litigation related to this issue probably will play out for several months, and in the meantime investors will surely be jittery. But for those who are inclined toward a somewhat more risky play, Bristol-Myers may be worth a close look.

Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.