Oct. 22 (Bloomberg) -- Bristol-Myers Squibb Co. raised its earnings forecast for the year after third-quarter profit rose 64 percent on lower costs and higher sales of its blood thinner Plavix and mood stabilizer Abilify.

Net income from continuing operations was $966 million, or 48 cents a share, compared with $588 million, or 29 cents, a year earlier, the New York-based company said today in a statement. Excluding one-time items, profit was 52 cents a share, beating by a penny the average estimate of a 13 analysts surveyed by Bloomberg.

Revenue increased 4 percent to $5.49 billion. Bristol- Myers Chief Executive Officer James M. Cornelius is trying to cut $2.5 billion in spending before generic copies of its top- selling Plavix reach the market in 2012. Cornelius also has been making acquisitions and forming partnerships to boost sales. The company completed the $2.4 billion purchase of Medarex Inc. in the quarter giving it rights to the melanoma drug ipilimumab.

“Bristol-Myers’ beat came mainly from lower costs, a higher gross profit margin and a lower tax rate,” Leerink Swann analyst Seamus Fernandez wrote today in a research note. “Plavix and Abilify sales came in lower-than- expected.”

Earnings in the quarter a year ago were boosted by the sale of wound products unit ConvaTec, resulting in net income of $2.58 billion, or $1.28 a share. On that basis, Bristol-Myers net earnings declined 63 percent in the third quarter of this year.

Forecast Increased

The company raised its 2009 full-year forecast for profit from continuing operations to $1.72 to $1.77 from $1.58 to $1.68. The increase includes the $310 million it will get in the fourth quarter from the sale of its over- the-counter assets in Asia and shares in PT Bristol-Myers Squibb Indonesia Tbk. It also increased by 5 cents the lower end of its outlook, when certain items are excluded, to $2.00 a share to $2.05 a share.

Bristol-Myers fell 23 cents, or 1 percent, to $22.46 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have fallen 3.4 percent this year.

Bristol’s earnings were hurt a year earlier when the company recorded a loss of $224 million from investments in auction rate securities.

Diabetes Drug

Bristol’s diabetes treatment Onglyza had $20 million in revenue since winning U.S. marketing clearance in July. Onglyza, or saxagliptin, competes with Merck & Co.’s Januvia. Both drugs are part of a new category of medicines called DPP-4 inhibitors that spur the pancreas to make more insulin and cause the liver to produce less glucose.

Sales of Plavix increased 8 percent to $1.55 billion and mood stabilizer Abilify rose 16 percent to $653 million. Plavix missed Fernandez’s revenue estimate by $16 million, and Abilify by $27 million, according to his note.

Sales of the Erbitux cancer treatment, which Bristol- Myers sells with Eli Lilly & Co., fell 3 percent to $179 million.

The company is considering options for Mead Johnson Nutrition Co., its infant formula unit that sold shares to the public in February.

“We’ve all been surprised at how quickly it’s gone up to $42 from its original IPO,” Cornelius said on a conference call with analysts today. Bristol Myers owns at least 80 percent of Mead Johnson. Options may include a spinoff, a sale or keeping the stake.

To contact the reporters on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net; Meg Tirrell in New York at mtirrell@bloomberg.net.

Last Updated: October 22, 2009 16:05 EDT