By: Billy Fisher

Contributor, Stock Traders Daily

Stock Traders Daily (La Jolla, CA) Bristol-Myers Squibb (NYSE: BMY) is on the lookout for potential takeover targets or other strategic partnerships that can bolster the drugmaker’s research and development pipeline.

The recent consolidation that has taken place in the pharmaceutical industry may have served as a bit of a wake-up call for the New York-based company. In the first-quarter alone, the industry has already seen Pfizer (NYSE: PFE) make a deal for Wyeth (NYSE: WYE), Merck (NYSE: MRK) acquire Schering-Plough (NYSE: SGP) and Roche complete its purchase of Genentech.

In an interview with the Wall Street Journal, Bristol’s CEO, James Cornelius made it clear that his company is looking to put its $9 billion in cash to work so that it can keep up in what is becoming a rapidly changing landscape for the industry. The company would prefer to avoid becoming the target of another mega-pharma deal and is looking to make some smaller sized acquisitions of its own.

Shares on Bristol-Myers have held up relatively well over the course of the past year. The stock presently trades only 7.3% below where it was trading a year ago. The stock wields a healthy dividend yield of 6.1% and is up 13.4% since its close on March 2nd.

The company has benefitted from strong sales out of its top two selling drugs, Plavix and Abilify. In 2008, these two drugs experienced year-over-year sales growth of 18% and 30%. The company will continue to rely upon these core drugs, but it is also looking to some of the partnerships that it currently has in place to continue the firm’s momentum while it seeks out new deals.

Bristol has partnered with AstraZeneca (NYSE: AZN) on a promising type 2 diabetes treatment that is currently under review by the FDA. The company is also looking to profit down the road from a partnership that it formed with Exelixis (Nasdaq: EXEL) this past December. The Exelixis partnership would stand to benefit from the commercialization of a thyroid cancer treatment that is currently in phase 3 clinical development. 

Fortunately, Bristol-Myers has a diverse portfolio that is not under immediate pressure from expiring patent protection. It has the time to carefully weigh the costs and benefits to any potential acquisition targets and also possesses the agility to close a deal with little notice. This combination will make Bristol-Myers a compelling stock to watch as the pharmaceutical industry continues to transform itself.

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