Oct. 23 (Bloomberg) -- Bristol-Myers Squibb Co.'s third- quarter profit beat analysts' estimates, led by sales of the blood thinner Plavix.

Earnings were 46 cents a share, excluding a $224 million loss from investments in auction-rate securities and a $2 billion gain from the sale of its ConvaTec unit, the New York-based company said today in a statement. Analysts were expecting 42 cents. Sales increased 14 percent to $5.25 billion.

The ConvaTec sale and cash from operations leaves Bristol- Myers with $7.2 billion for possible acquisitions that would help offset losses expected when Plavix gets competition from cheaper generic copies in 2012. Chief Executive Officer James Cornelius said he has a ``long list'' of companies he'd like to buy at prices battered by the market slump.

``Our preliminary studies show that these biotech companies have dropped by nearly 40 percent in terms of their market capitalization and in essence it's a buyers' market,'' Cornelius said today on a conference call with analysts. ``I'm very confident that we can continue that strategy at a reasonable cost.''

Net income for the quarter tripled to $2.58 billion, or $1.29 a share, from $858 million, or 43 cents, a year earlier. Bristol-Myers will get an additional $900 million gain this quarter from the sale of its ImClone Systems Inc. shares to Eli Lilly & Co. as part of Lilly's acquisition of ImClone. Lilly outbid Bristol-Myers for ImClone, offering $6.5 billion.

Lilly Earnings

Lilly today reported adjusted earnings that beat analysts' estimates. Sales at the Indianapolis company also rose 14 percent, led by the antidepressant Cymbalta and impotence drug Cialis. Lilly had a $1.48 billion charge to settle U.S. and state investigations into marketing of the antipsychotic Zyprexa, causing a net loss of $465.6 million, or 43 cents a share.

Bristol-Myers rose 53 cents, or 3 percent, to $18.06 at 3:59 p.m. in New York Stock Exchange composite trading. Bristol-Myers fell 34 percent this year through yesterday. Lilly rose $1.41, or 4.3 percent, to $32.45.

Bristol-Myers raised its 2008 forecast to a range of $1.61 to $1.66 a share, from $1.36 to $1.46, on the ImClone sale. It narrowed its adjusted-earnings forecast to $1.65 to $1.70, in line with the average of analyst's estimates.

Investment Losses

Income from continuing operations in the quarter fell 22 percent to $588 million, or 30 cents, from $753 million, or 38 cents, a year earlier. The new figure includes the $224 million in losses from investments in the auction rate securities.

Bristol-Myers previously recorded losses from the same investments, bringing the total to $524 million. The company still has $213 million of the securities on its books, and says it has put its cash in U.S. Treasury Bills and Treasury-backed securities.

Bristol-Myers had a gain of $247 million in the year-earlier period from the sale of its non-prescription drug business in Japan.

Sales of Plavix, co-marketed with Sanofi-Aventis SA, gained 15 percent to $1.44 billion in the third quarter. Revenue f rom Abilify, prescribed for bipolar disorder and schizophrenia, rose 34 percent to $564 million. Bristol-Myers won U.S. approval in May to market the drug for long-term use by children and teenagers. Bristol-Myers sells Abilify in the U.S. and in several European countries with Tokyo-based Otsuka Pharmaceutical Co., which discovered it.

The cancer treatment Erbitux, which Bristol-Myers markets in the U.S. with New York-based ImClone, generated $184 million, a 1 percent decline. The medicine is approved to treat colon cancer and tumors of the head and neck. German drugmaker Merck KGaA sells Erbitux in Europe.

AIDS, Hepatitis Drugs

Barbara Ryan, an analyst at Deutsche Bank, had been expecting a 10 percent increase in Erbitux sales to $204 million. Bristol-Myers said on Oct. 6 that it would sell its stake in ImClone and keep its rights to sell Erbitux in the U.S.

``Market confusion around the proper usage of Erbitux in biomarker selected patients may be the cause of the decrease in sales,'' said Brian Henry, a Bristol-Myers spokesman, in an e- mailed statement.

Revenue from the AIDS medicine Reyataz climbed 25 percent to $342 million and the AIDS therapy Sustiva rose 24 percent to $294 million. Sales of the hepatitis B treatment Baraclude doubled to $144 million.

Gains from converting overseas sales to U.S. dollars contributed about 3 percent of the growth. The 42-cent estimate for third-quarter earnings represents the average in a Bloomberg survey of 13 analysts.

To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net

Last Updated: October 23, 2008 16:05 EDT