Executive Summary

Bristol-Myers Squibb Company (which may be referred to as Bristol-Myers Squibb, BMS or the Company) is a global biopharmaceutical and nutritional products company whose mission is to extend and enhance human life by providing the highest quality biopharmaceutical and nutritional products. The Company is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceuticals and nutritional products. The Company has two reportable segments-BioPharmaceuticals and Mead Johnson. The BioPharmaceuticals segment consists of the global biopharmaceutical and international consumer medicines business, which accounted for approximately 86% of the Company's net sales. The Mead Johnson segment consists of the Company's 83.1% interest in the newly publicly traded Mead Johnson Nutrition Company (Mead Johnson), which is primarily an infant formula and children's nutrition business, and which accounted for approximately 14% of the Company's net sales.

Financial Highlights

The following table is a summary of operating activity:



                                             Three Months Ended June 30,            Six Months Ended June 30,
Dollars in Millions                           2009                 2008              2009                2008
Net Sales                                 $      5,384         $      5,203      $     10,399        $     10,094
Gross Margin                                     3,923                3,533             7,525               6,854
Gross Margin as a percentage of sales               73 %                 68 %              72 %                68 %
Net Earnings                                     1,298                1,005             2,219               1,896

Net Sales

The Company's net sales increased 3% despite a 5% unfavorable foreign exchange impact for both the three and six months ended June 30, 2009. PLAVIX* (clopidogrel bisulfate) and ABILIFY* (aripiprazole) continue to drive sales growth with sales increases of 11% and 22% for the three months ended June 30, 2009, respectively, and 10% and 25% for the six months ended June 30, 2009, respectively. Significant contributions to sales growth were also provided by the Company's virology portfolio, led by the HIV portfolio, which consists of the SUSTIVA (efavirenz) Franchise and REYATAZ (atazanavir sulfate), and BARACLUDE (entecavir), and other key products including ORENCIA (abatacept) and SPRYCEL (dasatinab). ERBITUX* (cetuximab) sales were down 12% for both the three and six months ended June 30, 2009.

Net Earnings

The increase in net earnings for the three and six months ended June 30, 2009 was attributed to sales growth, improvement in gross margins and cost improvements in marketing, selling and administrative due to productivity transformation initiative (PTI) savings. Gross margin improvement is attributed to realized manufacturing savings from the Company's PTI, other manufacturing efficiencies; favorable foreign exchange impact; cost improvements, favorable product mix and price increases.

Strategy

The Company continues to execute its multi-year strategy to transform into a next-generation biopharmaceutical company. The strategy encompasses all aspects and all geographies of the business and will yield substantial cost savings and cost avoidance and increase the Company's financial flexibility to take advantage of attractive market opportunities that may arise.

As part of the Company's strategy, in the first quarter of 2009 its subsidiary Mead Johnson completed an initial public offering of its Class A common stock. Net proceeds received were $782 million post initial public offering (IPO), and the Company holds an 83.1% interest in Mead Johnson and 97.5% of the combined voting power of the outstanding common stock.

In addition, the Company extended its ABILIFY* comarketing agreement in the U.S. and entered into an oncology collaboration in the U.S., Japan and European Union (EU) markets with Otsuka Pharmaceutical Company Ltd. (Otsuka) in April 2009.

Managing costs is one part of the Company's overall strategy. The Company's announced PTI is designed to create a total of $2.5 billion in annual productivity savings and cost avoidance by 2012. The charges associated with the PTI are estimated to be in the range of $1.3 billion to $1.6 billion, which includes $806 million of costs already incurred.

The Company will continue to focus on the development of its BioPharmaceuticals business and will maintain growth by investing in research and development as well as in key growth products, including specialty and biologic medicines and cardiovascular and metabolic drugs. The Company is seeking to reallocate resources to continue its string of pearls strategy and enable strategic transactions, which could range from collaboration and license agreements to outright acquisition of companies.

On July 22, 2009, Bristol-Myers Squibb and Medarex, Inc. (Medarex) announced that the companies signed a definitive merger agreement that provides for the acquisition of Medarex by Bristol-Myers Squibb for an aggregate purchase price of approximately $2.4 billion. See "Item 1. Financial Statements-Note 22. Subsequent Event" for further discussion.

Product and Pipeline Developments

Belatacept

• In May 2009, belatacept, an investigational co-stimulation blocker being studied for use in solid organ transplantation, was the subject of nine company-sponsored clinical presentations (including the first Phase III data) at the American Transplant Congress. The data suggest that belatacept may represent a promising therapeutic option for kidney transplant patients.

ERBITUX*

• On July 20, the Company and Eli Lilly and Company (Lilly) announced that the U.S. Food and Drug Administration (FDA) had approved revisions to the U.S. prescribing information for ERBITUX* concerning the treatment of patients with an epidermal growth factor receptor (EGFR)-expressing metastatic colorectal cancer (mCRC). The labeling revisions include a modification which states that ERBITUX* is not recommended for patients whose tumors had K-ras mutations in codon 12 or 13. An estimated 40% of patients with mCRC have K-ras mutations while the majority, approximately 60%, has a wild-type K-ras gene.

SPRYCEL

• In May 2009, at the American Society of Clinical Oncology annual meeting, the Company presented interim results from two Phase II SPRYCEL studies, which demonstrate that SPRYCEL may have potential as a treatment for a castrate-resistant prostate cancer (CRPC). A Phase III study of SPRYCEL in CRPC is currently ongoing.

• In May 2009, the Company announced that the FDA has granted full approval for SPRYCEL for the treatment of adults in all phases of chronic myeloid leukemia (CML) (chronic, accelerated, or myeloid or lymphoid blast phase) with resistance or intolerance to prior therapy including GLEEVEC* (imatinib mesylate).

Dapagliflozin

• In June 2009, at the American Diabetes Association Annual Scientific Sessions, a 12-week study of dapagliflozin was presented which demonstrated improved glycemic control in inadequately controlled type 2 diabetes patients who were treated with high doses of insulin and common oral anti-diabetic medicines.

ONGLYZA

• In June 2009, the Company and AstraZeneca PLC (AstraZeneca) announced that the marketing authorization application for ONGLYZA (saxagliptin) received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) for the treatment of type 2 diabetes in adults as add-on therapy with metformin, a thiazolidinedione or a sulphonylurea.

• In June 2009, at the American Diabetes Association Annual Scientific Sessions, interim analysis (at 102 weeks) of a 42-month long-term Phase III extension study was presented which showed that when ONGLYZA was added to metformin in patients with inadequately controlled type 2 diabetes, the profile of adverse events was consistent with that seen at 24 weeks, and the treatment regimen produced long-term glycemic improvement.

• In April 2009, the Company and AstraZeneca announced that the Prescription Drug User Fee Act date, which is the date by which a decision from the FDA is expected, for ONGLYZA was extended from April 30, 2009 to July 30, 2009.

Ipilimumab

• In May 2009, the Company and Medarex announced, at the American Society of Clinical Oncology annual meeting, that updated survival results from follow-up extensions of three Phase II studies show a two-year survival ranging from 30% to 42% in patients with advanced metastatic melanoma (Stage III or IV).

XL184

• In May 2009, the Company and Exelixis reported, at the American Society of Clinical Oncology annual meeting, encouraging data from an ongoing Phase II trial of XL184 in patients with previously-treated glioblastoma multiforme, the most common and aggressive form of brain tumor.

ORENCIA

• In June 2009, the Company announced, at the Annual European Congress of Rheumatology (EULAR), the results of two studies that demonstrated the consistent safety and effectiveness over five and seven years of treatment in rheumatoid arthritis patients who have had an inadequate response to methotrexate.

Three Months Results of Operations

The following discussions of the Company's results of continuing operations exclude the results related to the ConvaTec and the Medical Imaging businesses prior to their respective divestitures in 2008. These businesses have been segregated from continuing operations and included in discontinued operations for the three months ended June 30, 2008, refer to "Item 1. Financial Statements-Note 6. Discontinued Operations" for further discussion.

The Company's results of operations were as follows:

                                                           Three Months Ended June 30,
Dollars in Millions                                    2009            2008          % Change
Net Sales                                            $   5,384       $   5,203              3 %
Earnings from Continuing Operations before Income
Taxes                                                $   1,741       $   1,221             43 %
% of net sales                                            32.3 %          23.5 %
Provision for Income Taxes                           $     443       $     258             72 %
Effective tax rate                                        25.4 %          21.1 %
Net Earnings from Continuing Operations              $   1,298       $     963             35 %
% of net sales                                            24.1 %          18.5 %
Net Earnings Attributable to Noncontrolling
Interest                                             $     315       $     241             31 %
% of net sales                                             5.9 %           4.6 %
Net Earnings Attributable to Bristol-Myers Squibb
Company                                              $     983       $     764             29 %
% of net sales                                            18.3 %          14.7 %

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

                          Three Months Ended June 30,                 2009 vs. 2008
                                   Net Sales                       Analysis of % Change
                                                            Total                     Foreign
Dollars in Millions        2009                2008         Change   Volume   Price   Exchange
U.S.                  $         3,247     $         2,898    12%       6%      6%        -
Non-U.S.                        2,137               2,305    (7)%      3%      2%      (12)%

Total                 $         5,384     $         5,203     3%       4%      4%       (5)%

The increase in U.S. net sales was driven by growth in key U.S. biopharmaceutical products, which are described below in further detail. Decreases in international net sales were primarily due to a strengthening U.S. dollar relative to certain foreign currencies, especially the euro and U.K. pound, and generic competition for PLAVIX* in the EU and certain mature brands. These decreases were partially offset by growth in certain key products, including BARACLUDE, the HIV portfolio, SPRYCEL, ORENCIA and Mead Johnson products.

In general, the Company's business is not seasonal. For information on U.S. biopharmaceutical prescriber demand, reference is made to the table within "-BioPharmaceuticals" 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 key biopharmaceuticals products and new products sold by the U.S. BioPharmaceuticals business. The U.S. and non-U.S. net sales are based upon the location of the customer.

The Company operates in two reportable segments-BioPharmaceuticals and Mead Johnson. The Company's net sales by operating segment were as follows:

                                           Three Months Ended June 30,
                                    Net Sales                     % of Total Net Sales
   Dollars in Millions     2009        2008      % Change         2009             2008
   BioPharmaceuticals    $   4,665   $   4,475          4 %         86.6 %           86.0 %
   Mead Johnson                719         728         (1 )%        13.4 %           14.0 %

   Total                 $   5,384   $   5,203          3 %        100.0 %          100.0 %

The Company recognizes revenue net of various sales adjustments to arrive at net sales as reported in the consolidated statements 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 was as follows:

                                                               Three Months Ended June 30,
Dollars in Millions                                             2009                 2008
Gross Sales                                                 $      6,049         $      5,854
Gross-to-Net Sales Adjustments
Prime Vendor Charge-Backs                                           (139 )               (126 )
Women, Infants and Children (WIC) Rebates                           (187 )               (203 )
Managed Health Care Rebates and Other Contract Discounts            (111 )                (92 )
Medicaid Rebates                                                     (35 )                (40 )
Cash Discounts                                                       (75 )                (68 )
Sales Returns                                                        (34 )                (41 )
Other Adjustments                                                    (84 )                (81 )

Total Gross-to-Net Sales Adjustments                                (665 )               (651 )

Net Sales                                                   $      5,384         $      5,203

Gross-to-net sales adjustments increased by 2%. Prime vendor charge-backs increased by 10% primarily due to higher government sales of PLAVIX* and higher rebates on ORENCIA. Managed health care rebates and other contract discounts increased by 21%, primarily due to higher PLAVIX* Medicare sales and an increase in contractual discount rates. Medicaid rebates decreased by 13% due to the recovery of net overpayments related to the three year period 2002 through 2004 offset by higher rebates. See "-Six Months Results of Operations" for further discussion.

BioPharmaceuticals

The composition of the change in biopharmaceutical net sales was as follows:



                          Three Months Ended June 30,                 2009 vs. 2008
                                   Net Sales                       Analysis of % Change
                                                            Total                     Foreign
Dollars in Millions        2009                2008         Change   Volume   Price   Exchange
U.S.                  $         2,977     $         2,625    13%       6%      7%        -
Non-U.S.                        1,688               1,850    (9)%      4%       -      (13)%

Total                 $         4,665     $         4,475     4%       5%      4%       (5)%

U.S. biopharmaceutical net sales increased primarily due to increased sales of PLAVIX*, ABILIFY*, the HIV portfolio and ORENCIA. International biopharmaceutical net sales decreased as a result of unfavorable foreign exchange rates due to the strengthening U.S. dollar, which more than offset increased sales of BARACLUDE, SPRYCEL, the HIV portfolio and ABILIFY*. 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* (irbesartan/irbesartan-hydrochlorothiazide).

Net sales of key biopharmaceutical products represent 81% and 76% of total biopharmaceutical net sales in the second quarter of 2009 and 2008, respectively. The following table details U.S. and international biopharmaceuticals net sales by key products, percentage change from the prior period, as well as the foreign exchange impact when compared to the prior period. Commentary detailing the reasons for significant variances for key products is provided below:

                                                          Three Months Ended June 30,
                                                                                          % Change
                                                                                      Attributable to
Dollars in Millions                        2009          2008        % Change         Foreign Exchange
Cardiovascular
PLAVIX*
U.S.                                     $   1,393     $   1,207           15 %                        -
Non-U.S.                                       146           180          (19 )%                   (11 )%
Total                                        1,539         1,387           11 %                     (1 )%
AVAPRO*/AVALIDE*
U.S.                                           179           184           (3 )%                       -
Non-U.S.                                       134           151          (11 )%                   (13 )%
Total                                          313           335           (7 )%                    (6 )%
Virology
REYATAZ
U.S.                                           169           159            6 %                        -
Non-U.S.                                       162           165           (2 )%                   (16 )%
Total                                          331           324            2 %                     (8 )%
SUSTIVA Franchise (total revenue)
U.S.                                           194           171           13 %                        -
Non-U.S.                                       118           111            6 %                    (18 )%
Total                                          312           282           11 %                     (7 )%
BARACLUDE
U.S.                                            39            35           11 %                        -
Non-U.S.                                       140           101           39 %                    (12 )%
Total                                          179           136           32 %                     (9 )%
Oncology
ERBITUX*
U.S.                                           171           193          (11 )%                       -
Non-U.S.                                         2             3          (33 )%                    (5 )%
Total                                          173           196          (12 )%                       -
SPRYCEL
U.S.                                            33            21           57 %                        -
Non-U.S.                                        74            55           35 %                    (22 )%
Total                                          107            76           41 %                    (16 )%
IXEMPRA
U.S.                                            26            26              -                        -
Non-U.S.                                         3             -           N/ A                     N/ A
Total                                           29            26           12 %                     (1 )%
Neuroscience
ABILIFY*
U.S.                                           518           403           29 %                        -
Non-U.S.                                       125           126           (1 )%                   (19 )%
Total                                          643           529           22 %                     (4 )%
Immunoscience
ORENCIA
U.S.                                           116            87           33 %                        -
Non-U.S.                                        32            19           68 %                    (27 )%
Total                                          148           106           40 %                     (5 )%

• U.S. net sales increased primarily due to higher average selling prices and increased demand. Estimated total U.S. prescription demand increased approximately 3%.

• International net sales were negatively impacted by the August 2008 launch in Germany of a clopidogrel alternative salt (clopidogrel besylate) and subsequent launches of other generic clopidogrel products in the EU.

• See "Item 1. Financial Statements-Note 21. Legal Proceedings and Contingencies-PLAVIX* Litigation."

AVAPRO*/AVALIDE* (known in the EU as APROVEL*/KARVEA*) - an angiotensin II receptor blocker for the treatment of

hypertension and diabetic nephropathy that is also part of the sanofi alliance

• U.S. net sales decreased primarily due to lower demand partially offset by higher average selling prices. Estimated total U.S. prescription demand decreased approximately 10%.

• International sales decreased primarily due to unfavorable foreign exchange. In Spain, APROVEL*/KARVEA* began to experience generic competition in the first quarter of 2009 and the Company expects this competition to increase over time. In 2008, the Company's annual net sales of KARVEA* in Spain were $57 million.

REYATAZ - a protease inhibitor for the treatment of HIV

• U.S. net sales increased primarily due to higher estimated total U.S. prescription demand of approximately 7%.

• International net sales decreased primarily due to unfavorable foreign exchange, which more than offset higher demand across most markets.

SUSTIVA Franchise - a non-nucleoside reverse transcriptase inhibitor for the treatment of HIV, which includes SUSTIVA, an antiretroviral drug, and bulk efavirenz, which is also included in the combination therapy, ATRIPLA* (efavirenz 600mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg), a product sold through a joint venture with Gilead Sciences, Inc. (Gilead)

• U.S. net sales increased primarily due to higher demand as well as higher average selling prices. Estimated total U.S. prescription demand increased approximately 9%.

• International net sales increased despite unfavorable foreign exchange primarily due to continued demand generated from the launch of ATRIPLA* in Canada and the EU in the fourth quarter of 2007.

• In April 2009, Teva Pharmaceuticals, Ltd. (Teva) filed an Abbreviated New Drug Application with the FDA to manufacture and market a generic version of ATRIPLA*. In May 2009, Gilead filed a patent infringement action against Teva. For further details see "Item 1. Financial Statements-Note
21. Legal Proceedings and Contingencies."

BARACLUDE - an oral antiviral agent for the treatment of chronic hepatitis B

• Worldwide net sales increased primarily due to continued growth across all markets, particularly international markets.

• There continues to be increased awareness and acceptance of its long-term efficacy, safety and resistance as evidenced by the American Association for the Study of Liver Disease recommendation of BARACLUDE as a first-line treatment option.

ERBITUX* - a monoclonal antibody designed to exclusively target and block the
         Epidermal Growth Factor Receptor, which is expressed on the surface of
         certain cancer cells in multiple tumor types as well as normal cells and
         is currently indicated for use against colorectal cancer and head and
         neck cancer. ERBITUX* is part of the Company's strategic alliance with
         Lilly

• U.S. net sales decreased primarily due to study results released in 2008 regarding the impact of the K-ras gene expression on the effectiveness on patients with colorectal cancer.

SPRYCEL - an oral inhibitor of multiple tyrosine kinases, for the treatment of adults with chronic, accelerated, or myeloid or lymphoid blast phase chronic myeloid leukemia with resistance or intolerance to prior therapy, including GLEEVEC* (imatinib meslylate), which is part of the Company's strategic alliance with Otsuka

• Worldwide net sales increased primarily due to higher demand in previously launched markets, growth attributed to recently launched markets as well as higher U.S. average selling prices.

• Worldwide net sales were relatively flat.

ABILIFY* - an antipsychotic agent for the treatment of schizophrenia, bipolar
         mania disorder and major depressive disorder and is part of the
         Company's strategic alliance with Otsuka

• U.S. net sales increased primarily due to increased demand. Estimated total U.S. prescription demand increased approximately 29% and was primarily attributed to the 2008 and 2007 indications for certain patients with bipolar disorder and major depressive disorder.

• International net sales increased primarily due to increased prescription demand, which was aided by a new bipolar indication in the second quarter of 2008 in the EU.

ORENCIA - a fusion protein indicated for adult patients with moderate to severe rheumatoid arthritis who have had an inadequate response to one or more currently available treatments, such as methotrexate or anti-tumor necrosis factor therapy

• Worldwide net sales increased primarily due to increased demand.

The estimated U.S. prescription change data provided throughout this report includes information only from the retail and mail order channels and does not reflect information from other channels such as hospitals, home health care, . . .