Executive Summary

Bristol-Myers Squibb Company (which may be referred to as Bristol-Myers Squibb, BMS or the Company) 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 pharmaceutical and related health care products.

Financial Highlights

For the third quarter of 2008, the Company reported global net sales of $5.3 billion, an increase of 14%, including a 3% favorable foreign exchange impact, compared to the same period in 2007. The growth was driven by a 15% increase in pharmaceutical net sales to $4.5 billion as well as a 10% increase in nutritional net sales to $744 million.

Diluted net earnings per common share from continuing operations was $0.30 in the third quarter of 2008 compared with $0.38 in the corresponding period in 2007. The 2008 results included charges of $224 million attributed to the impairment of auction rate securities (ARS) and $107 million associated with the implementation of the Productivity Transformation Initiative (PTI), whereas the 2007 results include a $247 million gain associated with the sale of a product asset. During the third quarter of 2008, the Company generated $1.4 billion of cash from operating activities, obtained proceeds of $4.1 billion associated with the sale of its ConvaTec business and used approximately $1.2 billion to redeem most of its Floating Rate Convertible Senior Debentures.

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 will be expanded to achieve an additional $1.0 billion in projected annual cost savings and cost avoidance by 2012 in addition to the previously announced strategy to realize $1.5 billion in annual cost savings and cost avoidance by 2010. The Company is on track to achieve the $1.5 billion in annual cost savings and cost avoidance by 2010. Costs associated with achieving the $1.5 billion in annual cost savings and cost avoidance by 2010 are estimated to be between $0.9 billion to $1.1 billion on a pre-tax basis. Costs associated with the expansion of PTI for an additional $1.0 billion in cost savings and cost avoidance through 2012 have not yet been determined. The Company has incurred approximately $0.6 billion of costs to date in connection with the implementation of the PTI, including approximately $0.1 billion in the third quarter of 2008.

Consistent with the Company's objective to maximize the value of its non-pharmaceutical businesses, in August 2008, the Company completed the sale of its ConvaTec business for a gross purchase price of approximately $4.1 billion, subject to customary post-closing adjustments, to Cidron Healthcare Limited, an affiliate of Nordic Capital Fund VII and Avista Capital Partners L.P. (Avista).

On September 15, 2008, Mead Johnson Nutritionals filed a registration statement with the U.S. Securities and Exchange Commission for an initial public offering of its Class A Common Stock. The Company plans 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 August 2008, the Company entered into an agreement with PDL BioPharma Inc. (PDL) to license and commercialize Elotuzumab, PDL's blood cancer drug for the treatment of multiple myeloma.

Eli Lilly and Company (Lilly) commenced a tender offer of $70 per share on October 14, 2008 for the outstanding shares of ImClone Systems Incorporated's (ImClone) common stock. Based on Bristol-Myers Squibb's ownership of 14.4 million shares of ImClone, the Company expects to receive approximately $1.0 billion in cash upon Lilly's acceptance of the Company's tendering of its shares. The Company will continue to have marketing rights to ERBITUX* and believes it has the rights to ImClone's investigational compound IMC-11F8.

In the third 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), REYATAZ (atazanavir sulfate), the SUSTIVA Franchise (efavirenz), ERBITUX* (cetuximab), ORENCIA (abatacept), BARACLUDE (entecavir), SPRYCEL (dasatinib) and IXEMPRA (ixabepilone).

New Product and Pipeline Developments

In October 2008, the U.S. Food and Drug Administration (FDA) approved the use of REYATAZ (atazanavir sulfate) 300 milligram once-daily boosted with ritonavir 100 milligram as part of combination therapy in previously untreated (treatment-naïve) HIV-1 infected patients. This use of once-daily REYATAZ/ritonavir in HIV-1 infected treatment-naïve adult patients is based upon 48-week results from the CASTLE study, which demonstrated similar antiviral efficacy of REYATAZ/ritonavir to twice-daily lopinavir/ritonavir, each as part of HIV combination therapy in treatment-naïve HIV-1 infected adult patients. Data from the CASTLE study was published in the August 23 issue of The Lancet.

In September 2008, Bristol-Myers Squibb and its development partner Medarex, Inc. announced updated survival data from three Phase II studies of ipilimumab in patients with advanced metastatic melanoma (stage III or IV) who had been previously treated. Study results showed that approximately half of patients who received ipilimumab (10 mg/kg) remained alive beyond one year.

In September 2008, at the annual meeting of the American Society for Therapeutic Radiology and Oncology, the Company and its development partner ImClone announced ERBITUX* five year data showing significant improvements in overall survival for patients with locally or regionally advanced head and neck cancer. In the September 10, 2008 issue of the New England Journal of Medicine, the EXTREME study was published and it showed that ERBITUX* improved survival in first-line recurrent and/or metastatic head and neck cancer.

In September 2008, at the annual meeting of the European Association for the Study of Diabetes, the Company and its development partner AstraZeneca announced results of Phase III studies of ONGLYZA (saxagliptin), when used in combination with metformin as an initial therapy, when added to solfonylorea or thiazolidinedione in patients with inadequately controlled type 2 diabetes significantly lowered A1C and demonstrated significant improvements across key measures of glucose control.

In September 2008, at the annual meeting of the European Society of Cardiology, the Company and its development partner Pfizer announced a Phase II study (APPRAISE-1) of apixaban - a novel anticoagulant - provided encouraging trends suggesting that anticoagulation with apixaban on top of current standards of care and continued beyond the initial hospitalization may reduce the risk of a second heart attack, stroke or death.

In August 2008, the Company and its development partner Pfizer announced that the primary endpoint was not met in a Phase III study of apixaban for prevention of venous thromboembolism (VTE) in patients undergoing total knee replacement. The rate of the primary efficacy endpoint on apixaban was numerically similar to that observed with enoxaparin, but did not meet the pre-specified statistical criteria for non-inferiority compared to enoxaparin. The results of the trial do not necessitate any changes in protocols of any other ongoing apixaban studies. The companies are considering further studies in preventing VTE in knee surgery and will not submit the U.S. regulatory filing for VTE prevention in the second half of 2009, as previously communicated. Programs directed toward prevention of VTE, including EMEA registration studies, treatment of VTE, Acute Coronary Systems and in the prevention of stroke in atrial fibrillation continue as planned.

In August 2008, the Company entered into an agreement with PDL BioPharma, Inc. for the global development and commercialization of elotuzumab, an anti-CS1 antibody currently in Phase I development for multiple myeloma.

In July 2008, the Company and its partner AstraZeneca announced that regulatory submissions for ONGLYZA (saxagliptin) were made in both the United States and in Europe on June 30 and July 1, respectively. The concurrent European filing further demonstrates the Company's commitment to rapidly bring forward new medicines for serious unmet medical needs like Type II diabetes. In September 2008, the FDA announced it has accepted the filing.

Three Months Results of Operations



                                                            Three Months Ended September 30,
                                                                                        % of Net Sales
Dollars in Millions                               2008         2007        % Change     2008        2007
Net Sales                                        $ 5,254      $ 4,601        14%
Earnings from Continuing Operations before
Minority Interest and Income Taxes               $ 1,155      $ 1,256        (8)%        22.0 %     27.3 %
Provision for Income Taxes                       $   308      $   292         5%
Effective tax rate                                  26.7 %       23.2 %
Net Earnings from Continuing Operations          $   588      $   753       (22)%        11.2 %     16.4 %

Third quarter 2008 net sales increased 14% to $5,254 million, including a 3% favorable foreign exchange impact, compared to the same period in 2007, driven by increased pharmaceutical net sales which totaled $4,510 million in the third quarter of 2008. U.S. net sales increased 14% to $3,064 million in the third quarter of 2008 compared to the same period in 2007, primarily due to increased sales of PLAVIX*, ABILIFY*, the HIV and hepatitis portfolio and ORENCIA partially offset by increased charges for sales returns of PRAVACHOL (Pravastatin). International net sales increased 14% to $2,190 million, including a 7% favorable foreign exchange impact. Nutritional net sales increased 10% to $744 million, including a 3% foreign exchange impact, compared to the same period in 2007.

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

Analysis of % Change Three Months Ended September 30, Total Change Volume Price Foreign Exchange 2008 vs. 2007 14% 8% 3% 3%

In general, the Company's business is not seasonal. For information on U.S. pharmaceutical prescriber demand, reference is made to the table within 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 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 September 30,
                                      Net Sales               % of Total Net Sales
       Dollars in Millions    2008      2007     % Change     2008            2007
       Pharmaceuticals       $ 4,510   $ 3,926     15%           85.8 %          85.3 %
       Nutritionals              744       675     10%           14.2 %          14.7 %

       Net Sales             $ 5,254   $ 4,601     14%          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 September 30,
Dollars in Millions                                         2008                     2007
Gross Sales                                           $          5,952         $          5,250
Gross-to-Net Sales Adjustments
Prime Vendor Charge-Backs                                         (129 )                   (127 )
Women, Infants and Children (WIC) Rebates                         (202 )                   (242 )
Managed Health Care Rebates and Other Contract
Discounts                                                          (93 )                    (84 )
Medicaid Rebates                                                   (52 )                    (27 )
Cash Discounts                                                     (78 )                    (62 )
Sales Returns                                                      (69 )                    (27 )
Other Adjustments                                                  (75 )                    (80 )

Total Gross-to-Net Sales Adjustments                              (698 )                   (649 )

Net Sales                                             $          5,254         $          4,601

Pharmaceuticals

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

Analysis of % Change Three Months Ended September 30, Total Change Volume Price Foreign Exchange 2008 vs. 2007 15% 10% 2% 3%

U.S. pharmaceutical net sales increased 18% to $2,708 million in the third quarter of 2008 compared to $2,302 million in the same period in 2007, primarily due to increased sales of PLAVIX* ABILIFY*, the HIV and hepatitis portfolio and ORENCIA partially offset by increased charges for sales returns of PRAVACHOL (Pravastatin). International pharmaceutical net sales increased 11%, including a 7% favorable foreign exchange impact, to $1,802 million for the third quarter of 2008 compared to $1,624 million in the same period in 2007. The increase was primarily due to increased sales of BARACLUDE, ABILIFY*, SPRYCEL and the HIV portfolio. The Company's reported international net 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 third quarter of 2008.

Key pharmaceutical products and their net sales, representing 81% and 78% of total pharmaceutical net sales in the third quarter of 2008 and 2007, respectively, are as follows:

                                             Three Months Ended September 30,
      Dollars in Millions                    2008           2007        % Change
      Cardiovascular
      PLAVIX*                             $     1,439    $     1,254          15 %
      AVAPRO*/AVALIDE*                            334            309           8 %
      PRAVACHOL                                    34             86         (60 )%
      Virology
      REYATAZ                                     342            273          25 %
      SUSTIVA Franchise (total revenue)           294            237          24 %
      BARACLUDE                                   144             72         100 %
      Oncology
      ERBITUX*                                    184            185          (1 )%
      TAXOL                                        91            102         (11 )%
      SPRYCEL                                      82             46          78 %
      IXEMPRA                                      25             -           -
      Affective (Psychiatric) Disorders
      ABILIFY*                                    564            420          34 %
      Immunoscience
      ORENCIA                                     119             60          98 %

• Sales of PLAVIX*, a platelet aggregation inhibitor that is part of the Company's alliance with Sanofi, increased 15%, including a 1% favorable foreign exchange impact. Sales of PLAVIX* increased 17% in the U.S. to $1,263 million in the third quarter of 2008 from $1,080 million in the same period in 2007, primarily due to higher average net selling prices and higher demand. Estimated total U.S. prescription demand for PLAVIX* increased 7% compared to the same period in 2007. 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 are seeking regulatory approval to enter those markets with generic clopidogrel bisulfate. In addition, at least one group of competitor companies has received marketing authorization for, and has started to market, an alternative salt form of clopidogrel in Germany. The competitor companies have announced that they plan to seek marketing authorization in other EU countries in addition to Germany.

• Sales of AVAPRO*/AVALIDE*, an angiotensin II receptor blocker for the treatment of hypertension, also part of the Sanofi alliance, increased 8%, including a 3% favorable foreign exchange impact. U.S. sales increased 7% to $189 million in the third quarter of 2008 from $176 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 7% compared to 2007. International sales increased 9%, including a 6% favorable foreign exchange impact, to $145 million compared to $133 million in the same period in 2007.

• Sales of REYATAZ, a protease inhibitor for the treatment of HIV, increased 25%, including a 4% favorable foreign exchange impact. U.S. sales increased 25% to $176 million in the third quarter of 2008 from $141 million in the same period in 2007, primarily due to higher demand. Estimated total U.S. prescription demand increased approximately 18% compared to the same period in 2007. International sales increased 26%, including a 7% favorable foreign exchange impact, to $166 million in the third quarter of 2008 from $132 million in the same period in 2007.

• Sales of the SUSTIVA Franchise, a non-nucleoside reverse transcriptase inhibitor for the treatment of HIV, increased 24%, including a 2% favorable foreign exchange impact. U.S. sales increased 23% to $185 million in the third quarter of 2008 from $151 million in the same period in 2007, primarily due to higher demand for ATRIPLA* (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg) and higher average selling prices, partially offset by lower demand for SUSTIVA. Estimated total U.S. prescription growth increased approximately 15% compared to 2007. International sales increased 27%, including a 6% favorable foreign exchange impact, to $109 million in the third quarter of 2008 from $86 million in the same period in 2007. Total revenue for the SUSTIVA Franchise includes sales of SUSTIVA, as well as revenue from bulk efavirenz included in the combination therapy ATRIPLA*, a once-daily single tablet three-drug regimen for HIV intended as a stand-alone therapy or in combination with other antiretrovirals. ATRIPLA* is sold through joint venture arrangements with Gilead Sciences, Inc. (Gilead). The Company records revenue for the bulk efavirenz component of ATRIPLA* upon sales of ATRIPLA* to third-party customers. For additional information on revenue recognition of the SUSTIVA Franchise, see "Item 1. Financial Statements-Note
2. Alliances and Investments."

• Sales of BARACLUDE, an oral antiviral agent for the treatment of chronic hepatitis B, increased 100% due to continued growth across all markets.

• Sales of ERBITUX*, which is sold by the Company almost exclusively in the U.S., were relatively flat at $184 million in the third quarter of 2008 compared to $185 million in the same period in 2007 due to a non-recurring increase in the third quarter 2007 sales attributed to a conversion to an open distributor model. ERBITUX* is marketed by the Company under a distribution and copromotion agreement with ImClone.

• Sales of TAXOL, an anti-cancer agent sold almost exclusively in international markets, decreased 11% despite a 7% favorable foreign exchange impact. The decrease is primarily due to increased generic competition in Japan.

• Sales for SPRYCEL, an oral inhibitor of multiple tyrosine kinases, increased 78%, including a 10% favorable foreign exchange impact. U.S. sales increased 24% to $21 million in the third quarter of 2008 from $17 million in the same period in 2007 due to higher demand and higher average net selling prices. Estimated total U.S. prescription demand increased approximately 29% compared to 2007. International sales increased 110%, including a 15% favorable foreign exchange impact, to $61 million compared to $29 million in the same period in 2007.

• Sales of IXEMPRA, a microtubule inhibitor for the treatment of patients with metastatic or locally advanced breast cancer, were $25 million in the third quarter of 2008. IXEMPRA was launched in the U.S. in October 2007.

• Total revenue for ABILIFY*, an antipsychotic agent for the treatment of schizophrenia, bipolar disorders and major depressive disorders, increased 34%, including a 3% favorable foreign exchange impact. U.S. sales increased 32% to $435 million in the third quarter of 2008 from $329 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 26% compared to the same period last year. International sales increased 42%, including a 12% favorable foreign exchange impact, to $129 million in the third quarter of 2008 from $91 million in the same period in 2007, due to continued growth in 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. For information on patent litigations relating to ABILIFY*, see "Item 8. Financial Statements-Note 22. Legal Proceedings and Contingencies" in the 2007 Form 10-K. For additional information on revenue recognition of ABILIFY*, see "Item 1. Financial Statements-Note 2. Alliances and Investments."

• Sales of ORENCIA, a fusion protein indicated for patients with moderate to severe rheumatoid arthritis, increased 98%, including a 3% favorable foreign exchange impact, primarily due to strong growth in the U.S. and increasing contributions in Europe where ORENCIA was launched in May 2007.

The estimated U.S. prescription change data provided above includes information only from the retail and mail order channels and does not reflect information from other channels, such as hospitals, institutions and long-term care, among others. The estimated prescription data is based on the Next-Generation Prescription Service (NGPS) version 2.0 data provided by IMS Health (IMS), a supplier of market research for the pharmaceutical industry, as described below.

The Company has calculated the estimated total U.S. prescription change based on NGPS data on a weighted-average basis to reflect the fact that mail order prescriptions include a greater volume of product supplied compared to retail prescriptions. Mail order prescriptions typically reflect a 90-day prescription whereas retail prescriptions typically reflect a 30-day prescription. The calculation is derived by multiplying NGPS mail order prescription data by a factor that approximates three and adding to this the NGPS retail prescriptions. The Company believes that this calculation of the estimated total U.S. prescription change based on the weighted-average approach with respect to the retail and mail order channels provides a superior estimate of total prescription demand. The Company uses this methodology for its internal demand forecasts.

Estimated End-User Demand

The following tables set forth for each of the Company's key pharmaceutical products sold by the U.S. Pharmaceuticals business, for the three months ended September 30, 2008 compared to the same period in the prior year: (i) total U.S. net sales for the period; (ii) change in reported U.S. net sales for the period;
(iii) estimated total U.S. prescription change for the retail and mail order channels calculated by the Company based on NGPS data on a weighted-average basis and (iv) months of inventory on hand in the distribution channel.

                                                          Three Months Ended September 30, 2008
                                          Total U.S.           Change in U.S.              Change in U.S.           At September 30, 2008
                                          Net Sales            Net Sales(a)            Total Prescriptions(b)          Months on Hand
PLAVIX*                                   $     1,263                        17 %                  7 %                       0.4
AVAPRO*/AVALIDE*                                  189                         7                   (7 )                       0.5
PRAVACHOL                                         (18 )                      **                  (52 )                       0.8
REYATAZ                                           176                        25                   18                         0.5
SUSTIVA Franchise (c) (total revenue)             185                        23                   15                         0.5
BARACLUDE                                          36                        64                   59                         0.5
. . .