Executive Summary

Bristol-Myers Squibb Company (BMS, the Company, or Bristol-Myers Squibb) is a global biopharmaceutical and related health care products company whose mission is to extend and enhance human life by providing the highest quality pharmaceutical and related health care products. The Company is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of pharmaceuticals and related health care products.

Financial Highlights

For the second quarter of 2008, the Company reported global net sales of $5.2 billion, an increase of 16% compared to the same period in 2007, driven by increased pharmaceutical net sales. The net sales growth included a 5% favorable foreign exchange impact.

Basic and diluted net earnings per common share from continuing operations were $0.37 and $0.36, respectively, in the second quarter of 2008 compared with $0.30 and $0.30, respectively in the corresponding period in 2007. The 2008 results include charges of $109 million, associated with the implementation of the previously announced Productivity Transformation Initiative (PTI), as well as favorable resolution of a prior period tax audit. During the quarter, the Company generated $1.1 billion of cash from operating activities and issued $1.6 billion aggregate principal amount of debt securities.

Strategy

The Company continues to execute its multi-year strategy and is transforming the Company into a next-generation biopharmaceutical company. The Company is focused on building for the future by maximizing the value of its non-pharmaceutical businesses, expanding and strengthening the pipeline both through developing its current portfolio of compounds and through strategic acquisitions, partnerships and other collaborative arrangements, increasing investment to improve the growth of its marketed products, and managing costs proactively.

Central to the Company's strategy is the PTI, which is on track to achieve $1.5 billion in annual cost savings and cost avoidance by 2010. Costs associated with the implementation of the PTI are estimated to be between $0.9 billion to $1.1 billion on a pre-tax basis. The Company has incurred approximately $0.5 billion of costs to date in connection with the implementation of the PTI, including approximately $0.1 billion in the second quarter of 2008. The Company has announced that it is expanding the PTI to achieve an additional $1 billion in annual cost savings by 2012. Costs associated with the expansion have not yet been determined.

Consistent with the Company's objective to maximize the value of its non-pharmaceutical businesses, in May 2008, the Company entered into a definitive agreement with Nordic Capital Fund VII and Avista Capital Partners L.P. (Avista) for the sale of its ConvaTec business, for a purchase price of approximately $4.1 billion, subject to customary post-closing adjustments. Also in January 2008, the Company completed the sale of its Medical Imaging business to Avista for a gross purchase price of $525 million.

The Company expects to file a registration statement by the end of 2008 to sell approximately 10% and no more than 20% of Mead Johnson Nutritionals through an initial public offering and to retain at least an 80% equity interest in the new company as part of the Company's overall business portfolio for the foreseeable future. After extensively considering strategic options, management believes this plan will allow Mead Johnson Nutritionals to implement its growth plan, increase shareholder value, and maintain its important financial contribution to the Company. The execution of the plan is dependent upon and subject to a number of factors and uncertainties including business and market conditions.

The Company continues to focus on supplementing its internal research and development portfolio with strategic partnerships and acquisitions. In May, the Company entered into an agreement with KAI Pharmaceuticals (KAI) to develop and commercialize KAI's novel acute heart attack medicine, KAI-9803. In June, the Company completed the acquisition of Kosan Biosciences, Inc. (Kosan), a cancer therapeutics company, for a net purchase price of approximately $191 million, subject to customary post-closing adjustments.

In the second quarter of 2008, the Company increased, and has plans to continue to increase, its investment to improve growth in its key products, which include PLAVIX* (clopidogrel bisulfate), ABILIFY* (aripiprazole), AVAPRO*/AVALIDE* (irbesartan/irbesartan-hydrochlorothiazide), REYATAZ (atazanavir sulfate), the SUSTIVA Franchise (efavirenz), ERBITUX* (cetuximab), ORENCIA (abatacept), BARACLUDE (entecavir), SPRYCEL (dasatinib) and IXEMPRA (ixabepilone).

New Product and Pipeline Developments

The Company continues to advance a robust pipeline. Regulatory submissions for ONGLYZA (saxagliptin) were made by the Company and AstraZeneca in both the United States (U.S.) and in Europe on June 30 and July 1, 2008, respectively. ONGLYZA is a compound for the treatment of diabetes.

In July 2008, ERBITUX* received marketing approval in Japan for treatment of patients with advanced or recurrent colorectal cancer.

In June 2008, European approval was received for an expanded indication for REYATAZ 300 mg once-daily boosted with ritonavir 100 mg as part of combination therapy in treatment-naοve human immunodeficiency virus (HIV)-1 infected patients.

In May 2008, FDA approval was received for new ABILIFY* indications for pediatric bipolar maintenance therapy, pediatric schizophrenia maintenance therapy, and as add-on treatment to lithium or valproate for acute treatment of bipolar disorder.

In May 2008, the Company entered into an agreement with KAI to develop and commercialize KAI's novel acute heart attack medicine, KAI-9803. In June 2008, Bristol-Myers Squibb completed the acquisition of Kosan, a cancer therapeutics company with a library of novel compounds, including Hsp90 inhibitors for cancer and microtubule stabilizers, which may have additional potential in neurodegenerative diseases.

In April 2008, ORENCIA was approved by the U.S. Food and Drug Administration (FDA) for treatment of juvenile rheumatoid arthritis. Additionally, the U.S. label for ORENCIA was revised with an indication that means ORENCIA is now an appropriate option for patients with moderate-to-severe rheumatoid arthritis, regardless of prior treatment received.

The European Committee for Medicinal Products for Human Use in March 2008 issued a positive opinion recommending approval of the 300 milligram loading dose tablet of PLAVIX*. This positive opinion was ratified by the European Commission in April 2008.

At the annual meeting of the American Society of Clinical Oncology (ASCO), a landmark phase III study (FLEX) showed that the addition of ERBITUX to platinum-based chemotherapy significantly increased overall survival in the first-line treatment of patients with advanced non-small cell lung cancer, when compared to platinum-based chemotherapy alone.

New Phase II data presented at the European League Against Rheumatism (EULAR) demonstrated that ORENCIA may delay the development of rheumatoid arthritis in people with undifferentiated inflammatory arthritis.

At the annual scientific sessions of the American Diabetes Association in June 2008, a phase III study demonstrated that saxagliptin produced significant reductions in key measures of glucose control in treatment-naοve people with type 2 diabetes compared to placebo.

Three Months Results of Operations



                                                                Three Months Ended June 30,
                                                                                          % of Net Sales
Dollars in Millions                               2008         2007        % Change       2008        2007
Net Sales                                        $ 5,203      $ 4,471            16 %
Earnings from Continuing Operations before
Minority Interest and Income Taxes               $ 1,221      $   985            24 %      23.5 %     22.0 %
Provision for Income Taxes                       $   258      $   203            27 %
Effective tax rate                                  21.1 %       20.6 %
Net Earnings from Continuing Operations          $   722      $   588            23 %      13.9 %     13.2 %

Second quarter 2008 net sales increased 16% to $5,203 million, including a 5% favorable foreign exchange impact, compared to the same period in 2007, driven by increased Pharmaceuticals net sales, which totaled $4,475 million in the second quarter of 2008.

U.S. net sales increased 15% to $2,966 million in the second quarter of 2008 compared to the same period in 2007, primarily due to increased sales of PLAVIX*, the continued growth of ABILIFY*, strong results from the HIV and hepatitis portfolio and increasing contribution of recent launches of products such as ORENCIA and IXEMPRA. International net sales increased 18% to $2,237 million, including a 12% favorable foreign exchange impact.

The composition of the change in sales is as follows:

Analysis of % Change Three Months Ended June 30, Total Change Volume Price Foreign Exchange 2008 vs. 2007 16 % 7 % 4 % 5 %

In general, the Company's business is not seasonal. For information on U.S. pharmaceutical prescriber demand, reference is made to the table within Business Segments under the Pharmaceuticals section below, which sets forth a comparison of changes in net sales to the estimated total prescription growth (for both retail and mail order customers) for certain of the Company's key pharmaceutical products sold by the U.S. Pharmaceuticals business.

The Company operates in two reportable segments-Pharmaceuticals and Nutritionals.

                                           Three Months Ended June 30,
                                     Net Sales                 % of Total Net Sales
      Dollars in Millions    2008      2007     % Change       2008            2007
      Pharmaceuticals       $ 4,475   $ 3,851         16 %        86.0 %          86.1 %
      Nutritionals              728       620         17 %        14.0 %          13.9 %

      Net Sales             $ 5,203   $ 4,471         16 %       100.0 %         100.0 %

The Company recognizes revenue net of various sales adjustments to arrive at net sales as reported on the consolidated statement of earnings. These adjustments are referred to as gross-to-net sales adjustments. The reconciliation of the Company's gross sales to net sales by each significant category of gross-to-net sales adjustments were as follows:

                                                                Three Months Ended June 30,
Dollars in Millions                                              2008                 2007
Gross Sales                                                  $       5,854        $       5,097
Gross-to-Net Sales Adjustments
Prime Vendor Charge-Backs                                             (126 )               (126 )
Women, Infants and Children (WIC) Rebates                             (203 )               (214 )
Managed Health Care Rebates and Other Contract Discounts               (92 )                (87 )
Medicaid Rebates                                                       (40 )                (43 )
Cash Discounts                                                         (68 )                (60 )
Sales Returns                                                          (41 )                (25 )
Other Adjustments                                                      (81 )                (71 )

Total Gross-to-Net Sales Adjustments                                  (651 )               (626 )

Net Sales                                                    $       5,203        $       4,471

Pharmaceuticals

The composition of the change in pharmaceutical net sales is as follows:

Analysis of % Change Three Months Ended June 30, Total Change Volume Price Foreign Exchange 2008 vs. 2007 16 % 8 % 3 % 5 %

U.S. pharmaceutical net sales increased 17% to $2,625 million in the second quarter of 2008 compared to $2,243 million in the same period in 2007, primarily due to increased sales of PLAVIX*, the continued growth of ABILIFY*, strong results from the HIV and hepatitis portfolio and increasing contribution of recent launches of products such as ORENCIA and IXEMPRA. International pharmaceutical sales increased 15%, including a 12% favorable foreign exchange impact, to $1,850 million for the second quarter of 2008 compared to $1,608 million in the same period in 2007. The increase was primarily due to increased sales of BARACLUDE and increased contributions from ABILIFY*, SPRYCEL and the HIV portfolio, partially offset by continued generic erosion of PRAVACHOL (pravastatin). The Company's reported international sales do not include copromotion sales reported by its alliance partner, Sanofi-Aventis (Sanofi) for PLAVIX* and AVAPRO*/AVALIDE*, which continue to show growth in the second quarter of 2008.

Key pharmaceutical products and their sales, representing 80% and 76% of total pharmaceutical sales in the second quarter of 2008 and 2007, respectively, are as follows:

                                               Three Months Ended June 30,
        Dollars in Millions                    2008         2007     % Change
        Cardiovascular
        PLAVIX*                             $    1,387    $  1,189         17 %
        AVAPRO*/AVALIDE*                           335         297         13 %
        PRAVACHOL                                   69         132        (48 )%
        Virology
        REYATAZ                                    324         254         28 %
        SUSTIVA Franchise (total revenue)          282         233         21 %
        BARACLUDE                                  136          59        131 %
        Oncology
        ERBITUX*                                   196         162         21 %
        TAXOL                                      101          95          6 %
        SPRYCEL                                     76          35        117 %
        IXEMPRA                                     26          -          -
        Affective (Psychiatric) Disorders
        ABILIFY* (total revenue)                   529         412         28 %
        Immunoscience
        ORENCIA                                    106          55         93 %

• Sales of PLAVIX*, a platelet aggregation inhibitor that is part of the Company's alliance with Sanofi, increased 17%, including a 2% favorable foreign exchange impact, to $1,387 million in the second quarter of 2008 from $1,189 million in the same period in 2007. Sales of PLAVIX* increased in the U.S. to $1,207 million in the second quarter of 2008 from $1,015 million in the same period in 2007. The comparison to 2007 sales reflects the adverse impact of residual generic competition for PLAVIX* in 2007. Estimated total U.S. prescription demand for clopidogrel bisulfate (branded and generic) increased 1% in the second quarter of 2008 compared to 2007. Estimated total U.S. prescription demand for branded PLAVIX* increased 11% in the same period. While market exclusivity for PLAVIX* is expected to expire in 2011 in the U.S. and 2013 in the major European markets, the composition of matter patent for PLAVIX* is the subject of litigation. For additional information on the PLAVIX* litigations, see "Item 1. Financial Statements-Note 20. Legal Proceedings and Contingencies." Data protection for PLAVIX* expired on July 15, 2008 in the European Union (EU). In most of the major markets within Europe, the product benefits from national patents, expiring in 2013, which specifically claim the bisulfate form of clopidogrel. In the remainder of EU member states, however, where there is no composition-of-matter patent covering clopidogrel bisulfate, competitors may seek to enter those markets with generic clopidogrel bisulfate after receiving regulatory approval. In addition, at least one group of competitor companies is seeking approval of an alternate salt form of clopidogrel in some EU member states.

• Sales of AVAPRO*/AVALIDE*, an angiotensin II receptor blocker for the treatment of hypertension, also part of the Sanofi alliance, increased 13%, including a 5% favorable foreign exchange impact, to $335 million in the second quarter of 2008 from $297 million in the same period in 2007. U.S. sales increased 8% to $184 million in the second quarter of 2008 from $170 million in the same period in 2007, primarily due to higher average net selling prices, partially offset by lower demand. Estimated total U.S. prescription demand decreased approximately 8% compared to 2007. International sales increased 19%, including a 12% favorable foreign exchange impact, to $151 million compared to $127 million in the same period in 2007. Market exclusivity for AVAPRO*/AVALIDE* (known in the EU as APROVEL*/KARVEA*) is expected to expire in 2012 (including pediatric extension) in the U.S. and in 2012-2013 in most countries in the EU; the Company does not, but others do, market AVAPRO*/AVALIDE* in Japan.

• Sales of PRAVACHOL, an HMG Co-A reductase inhibitor, decreased 48%, including a 5% favorable foreign exchange impact, to $69 million in the second quarter of 2008 from $132 million in the same period in 2007, due to continued generic competition in the U.S. and key European markets.

• Sales of REYATAZ, a protease inhibitor for the treatment of HIV, increased 28%, including a 7% favorable foreign exchange impact, to $324 million in the second quarter of 2008 from $254 million in the same period in 2007. U.S. sales increased 15% to $159 million in the second quarter of 2008 from $138 million in the same period in 2007, primarily due to higher demand. Estimated total U.S. prescription demand increased approximately 13% compared to the same period in 2007. International sales increased 42%, including a 14% favorable foreign exchange impact, to $165 million in the second quarter of 2008 from $116 million in the same period in 2007. Market exclusivity for REYATAZ is expected to expire in 2017 in the U.S., in countries in the EU and in Japan. Data exclusivity in the EU expires in 2014.

• Sales of BARACLUDE, an oral antiviral agent for the treatment of chronic hepatitis B, increased 131% to $136 million in the second quarter of 2008 from $59 million in the same period of 2007, due to continued growth across all markets. The Company has a composition of matter patent that expires in the U.S. in 2015, in the EU between 2011 and 2016 and in Japan in 2016. As previously disclosed, there is uncertainty about China's exclusivity laws, and due to this uncertainty, it is possible that one or more companies in China could receive marketing authorization from China's health authority at any time.

• Sales of ERBITUX*, which is sold by the Company almost exclusively in the U.S., increased 21% to $196 million in the second quarter of 2008 from $162 million in the same period in 2007, due to growth in the use for head and neck and colorectal cancer. ERBITUX* is marketed by the Company under a distribution and copromotion agreement with ImClone Systems Incorporated (ImClone). A use patent relating to combination therapy with anti-neoplastic treatments expires in 2017. There is no patent covering monotherapy. Currently, generic versions of biological products cannot be approved in the U.S., but this could change in the future. The Company's right to market ERBITUX* in North America under its agreement with ImClone expires in September 2018. The Company's right to market ERBITUX* in Japan expires in 2032 (unless after 2018 it becomes commercially unreasonable in Japan). The Company does not, but others do, market ERBITUX* in countries in the EU.

• Sales of TAXOL, an anti-cancer agent sold almost exclusively in non-U.S. markets, increased 6% to $101 million in the second quarter of 2008 from $95 million in the same period in 2007. The increase is primarily due to a 12% favorable foreign exchange impact offset by increased generic competition in Japan.

• Sales for SPRYCEL, an oral inhibitor of multiple tyrosine kinases, increased 117%, including an 18% favorable foreign exchange impact, to $76 million in the second quarter of 2008 from $35 million in the same period in 2007. U.S. sales increased 50% to $21 million in the second quarter of 2008 from $14 million in the same period in 2007. Estimated total U.S. prescription demand increased approximately 44% compared to 2007. International sales increased 162%, including a 29% favorable foreign exchange impact, to $55 million compared to $21 million in the same period in 2007. Market exclusivity for SPRYCEL is expected to expire in 2020 in the U.S. In several EU countries, the patent is pending and, if granted, would expire in 2020.

• Sales of IXEMPRA, a microtubule inhibitor for the treatment of patients with metastatic or locally advanced breast cancer, were $26 million in the second quarter of 2008. IXEMPRA was launched in the U.S. in October 2007. The Company has a composition of matter patent in the U.S and a corresponding patent in EU countries, both expiring in 2018. The Company has submitted its request for patent term extension for the composition of matter patent in the U.S., which could possibly extend the term of that patent until September 2020. The corresponding patent in EU countries may be eligible for patent term restoration, which could possibly extend the term of the patent in EU countries.

• Total revenue for ABILIFY*, an antipsychotic agent for the treatment of schizophrenia, bipolar disorders and major depressive disorders, increased 28%, including a 4% favorable foreign exchange impact, to $529 million in the second quarter of 2008 from $412 million in the same period in 2007. U.S. sales increased 25% to $403 million in the second quarter of 2008 from $322 million in the same period in 2007, primarily due to higher demand, driven by a new indication for major depressive disorders that was approved in the fourth quarter of 2007. Estimated total U.S. prescription demand increased approximately 19% compared to the same period last year. International sales increased 40%, including a 17% favorable foreign exchange impact, to $126 million in the second quarter of 2008 from $90 million in the same period in 2007, due to continued growth across European markets. Total revenue for ABILIFY* primarily consists of alliance revenue representing the Company's 65% share of net sales in countries where it copromotes with Otsuka Pharmaceutical Co., Ltd. (Otsuka) and the product is distributed by an Otsuka affiliate. Otsuka's market exclusivity protection for ABILIFY* is expected to expire in 2014 in the U.S. (including the granted patent term extension). For information on

• Sales of ORENCIA, a fusion protein indicated for patients with moderate to severe rheumatoid arthritis, increased 93%, including a 4% favorable foreign exchange impact, to $106 million in the second quarter of 2008, from $55 million in the same period in 2007, primarily due to strong growth in the U.S. ORENCIA was launched in Europe in May 2007. The Company has a series of patents covering abatacept and its method of use. A patent term extension has been granted for one of the U.S. composition of matter patents that expires in 2015, extending the term of the patent to 2019. In the majority of the EU countries, the Company has a patent covering abatacept that expires in 2012. Data exclusivity in the EU expires in 2017. As noted above, generic versions of biological products cannot be approved in the U.S., but this could change in the future.

In most instances, the basic exclusivity loss date indicated above is the expiration date of the patent that claims the active ingredient of the drug or the method of using the drug for the approved indication. In some instances, the basic exclusivity loss date indicated is the expiration date of the data exclusivity period. In situations where there is only data exclusivity without patent protection, a competitor could seek regulatory approval prior to the expiration of the data exclusivity period by submitting its own clinical trial data to obtain marketing approval. The Company assesses the market exclusivity period for each of its products on a case-by-case basis. The length of market exclusivity for any of the Company's products is impossible to predict with certainty because of the complex interaction between patent and regulatory forms of exclusivity and other factors. There can be no assurance that a particular product will enjoy market exclusivity for the full period of time that the Company currently anticipates. The estimates of market exclusivities reported above are for business planning purposes only and are not intended to reflect the Company's legal opinion regarding the strength or weakness of any particular . . .