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Bristol-Myers Squibb: The Caped Crusaders
Bristol-Myers Squibb's Joseph Campisi and Demetrios Kyonieus were virtually inseparable for eight months in 2012 while they negotiated an M&A deal that was large and complex. Because a deal like this was bound to be controversial as well, Campisi, the company's M&A master, and Kyonieus, BMS's vice president of strategic alliances and transactions, found themselves joining forces to fend off naysayers, placate accountants, and negotiate with partnerspulling multiple all-nighters along the way. The duo spent so much time together, they became known among colleagues as Batman and Robin. The name stuck, and the dynamic duo even made plans to attend a Halloween party clad in matching tuxedos and Batman masksuntil Hurricane Sandy put the kibosh on that.
"We never really settled on who was Batman and who was Robin," quips Campisi, vice president and associate general counsel for Bristol-Myers Squibb's transactional practice group. "But we definitely traveled and worked as a pair."
That kind of collaboration, camaraderie, talent, and hard work helped earn Bristol-Myers Squibb recognition as one of Corporate Counsel's Best Legal Departments. And the company needed those qualities more than ever last year as it faced a host of challenges. Most formidable was increased competition from lower-cost drugmakers as the patents expired on some of its top products, including its blockbuster drug Plavixthe second best-selling drug of all timeand two successful blood pressure medications. So the pressure was on the entire company to respond. The BMS legal team did its part by facilitating the launch of new drugs, including a skin cancer treatment and a blood thinner, that could help offset the loss in sales to generics.
We were also struck by the efforts of BMS intellectual property lawyers to work more closely with the company's R&D unita move that resulted in a whopping 75 percent increase in patent applications. And we noted how the lawyers deftly handled a steady stream of patent lawsuits, as well as product liability litigation and government investigations. We were also impressed with the legal team's global outlook and its ability to operate successfully in varied and quickly changing markets.
Finally, the passion that BMS lawyers have for their work got our attention. Time and again we heard about coworkers jumping in to help each other, of their trust and admiration for one another, and of their desire to provide the advice and legal expertise the company needs to succeed.
It was clear that they believe in the company's larger mission, and that faith appears to sustain them through successes and failures. "We're finding new treatments for patients suffering from serious diseases with an unmet medical need," says Henry Hadad, senior vice president and deputy general counsel for intellectual property. "We're bringing life-saving medications to people, and being a part of that process is truly inspiring."
Seven years ago, things were quite different. In 2006, following several scandals and a federal investigation that led to a raid of Bristol-Myers Squibb's Manhattan headquarters, the company's CEO and general counsel were fired. The new management took a hard look at the troubled company, knowing that the blockbuster medications were about to expire and the pipeline for new drugs was weak, and they realized that serious challenges lay ahead.
Analysts wondered whether the company would be sold, but the new management was determined to remain independent. In 2007 it announced a new strategy: BMS would focus entirely on biopharma, devoting its energies to developing medical treatments for serious diseases. It would sell off noncore businesses, boost R&D and intellectual property, and look to complete its transformation with alliances, partnerships, and acquisitionswhat it called its "string of pearls" strategy.
"It was a very different approach," said vice president and associate GC Paul Savidge, who has been at BMS for almost 14 years and witnessed the transformation. "It was very courageous and novel at the time."
Today, BMS is a global biopharmaceutical company with about 28,000 employees and sales last year of $17.6 billion. In the past six years it has sold off more than 40 noncore businesses for more than $15 billion. It has engaged in more than 20 transactionspartnerships and acquisitions. It has broadened its global reach. And it has increased R&D activity to improve its product pipeline.
That kind of dramatic transformation requires a strong legal departmenta fact not lost on Lamberto Andreotti, the company's CEO. "In our highly regulated industry, you really can't overestimate the importance of having a great general counsel backed by a great law department," he says. "Sandy and her team are trusted advisers, not only providing good legal advice, but also sound business advice based on a clear-eyed view of the business environment and the challenges we face."
"Sandy" is Sandra Leung, BMS's general counsel. In 2006 she was informed in a late-night phone call that the company's top leadership had just been ousted and that the board had chosen her to step into the suddenly vacated GC spot. Although she was not the most senior attorney in the legal department at the time, board members had confidence in her, as she had served for several years as corporate secretary to the board and had played an important in-house counsel role when the company was facing federal charges over its accounting practices.
So how did she respond when told she'd been tapped for the top legal job? "I said, 'Fine, but right now we need to draft the disclosure,' " Leung recalls. "I knew the market would be opening in a few hours, and we had to be ready."
Leung's farsightedness, quick thinking, and decisiveness are now pervasive in BMS's legal department, making it a transformative force within the company. "Sandy has encouraged direct and open communication among all levels in the law department," says Paul Golian, assistant general counsel for intellectual property. "She's taught us how to balance speed with rigor, and to always be accountable when making decisions."
Leung learned those skills early in her legal career. At age 24 she went to work as a prosecutor under former Manhattan district attorney Robert Morgenthau. For eight years, she tried all kinds of criminal cases and did well. But the hours were long and grueling. So in 1992, Leung, who was by then the mother of two small children, decided to move into the corporate world. "I went from trying gang-related homicides to litigating hair dye allergic reaction cases," she says.
By the time she was named GC some 15 years later, Leung knew that the legal department was in bad shape. It was entrenched with factions and fiefdoms, she says, and there was very little collaboration and transparency. She set out to transform her department so that it could better guide the company as it strove to emerge from its troubled past.
First, she made cuts in staffing and spendinga response to a management effort to cut expenses by 30 percent. Today the BMS legal department has 114 in-house attorneys worldwide38 of them (one-third of the total) based outside the United States in cities ranging from Buenos Aires to Prague to Shanghai.
She also moved almost all of the U.S.based BMS lawyers from Manhattan headquarters to BMS offices in New Jersey, where they can work together and be closer to the business units they advise. She broke up the department into six practice groups, but made sure there are no formal boundaries. Lawyers from the various groups collaborate on most matters. "Avoidance of litigation is even more important to the company than litigating a case, so it's really helpful that I can sit with regulatory and commercial lawyers and get their input," says Jonathan Wasserman, vice president and associate general counsel for litigation and government investigations.
This constant collaboration and removal of boundaries occurs with BMS's outside counsel as well. "When we work together we're not a BMS team and a [Wilmer] team," says Wilmer Cutler Pickering Hale and Dorr partner Bill Lee, who has handled numerous patent challenge cases for the company. "We're one team working seamlessly, and that's how it should be."
Wilmer is one of about a dozen "preferred" outside firms that BMS now uses for litigation and transactional issuesa number that used to total more than 200. "These are successful partnerships," says Wasserman. "In exchange for being preferred counsel, those attorneys have made investments in learning who we are and what we expect."
Indeed, outside counsel say they appreciate the close relationship they've developed with BMS attorneys. "There's actually no team I'd prefer to work with," says David Fox of Kirkland & Ellis, who has worked with Campisi on at least four of the company's important M&A deals in the last two years. "They're a demanding client, but they're just as demanding of themselves, so working with them is a pleasure."
Fox was brought in to help with the M&A deal that led to the Batman and Robin referencea transaction that had BMS partnering with AstraZeneca to acquire Amylin Pharmaceuticalsa highly sought-after developer and manufacturer of a promising new diabetes drug. The deal, spearheaded by Campisi, a former partner at Pillsbury Winthrop Shaw Pittman, on the in-house legal side, was extremely complex and was lauded by analysts and the financial press as one of the most innovative and successful transactions the pharmaceutical industry had ever seen. The nearly $7 billion price tag for Amylin was too steep for Bristol-Myers Squibb to tackle alone, but the company had collaborated with drugmaker AstraZeneca in the past, and the two agreed to pursue Amylin together. While alliances are not uncommon in drug development, it was very unusual for two public companies to join forces to buy another and then share in its ownership and operation.
BMS proved its lawyering skill in 2012 with other victories as well. A long, tangled legal battle over the drug Plavix finally came to an end when the U.S. Court of Appeals for the Federal Circuit ordered generic drug maker Apotex Inc. to pay BMS and its partner Sanofi almost $445 million in damages incurred when Apotex launched a generic version of the drug while it was still under patent. The lawyers racked up another win when the Federal Circuit upheld the patent that BMS and partner Otsuka Pharmaceutical Co. held for the antidepressant Abilify. (They also won a preliminary injunction in Australia against companies that sought to launch a generic version of Abilify.) And in Canada, BMS successfully defended its Sustiva patent against a challenge by Mylan Pharmaceuticals Inc.
The lawyers aren't resting on their laurels, however. They are intent on protecting their company's intellectual property, even as the pharma giant faces an unprecedented number of global challenges by generic companies that want to enter the market before its patents expire. As part of their efforts, they have worked to educate company scientists about the patent process, which is how they ended up boosting their patent filings by 75 percent last year.
BMS's law department has been so effective that the company's business units now call on the lawyers before they have legal problems. "It is the early proactive advice that prevents issues from occurring that is the most valuable," says CEO Andreotti. Case in point: After learning that a generic version of Sustiva, which is used in the treatment of the HIV virus, might receive regulatory approval in Europe a year before its patent was due to expire, BMS and its partner Merck & Co. initiated a series of infringement actions in the United Kingdom, Germany, and the Netherlands to prevent it from happening. The proactive move resulted in the granting in 2012 of a preliminary injunction in the U.K. that will stop a generic launch.
Even faced with potential disaster, the legal team has held on to its values. In January 2012 BMS acquired Inhibitex Inc., a developer of a hepatitis C drug, for about $2.5 billion. It was willing to pay a hefty price because it hoped the acquisition would add to its "string of pearls" strategy of developing and acquiring drugs for serious illnesses. The auction was competitive, but BMS won thanks to creative lawyering and its ability to negotiate terms and conditions. From a transactional perspective, the acquisition was a success.
But eight months later, the company was informed that a participant in a midstage study of the drug had suffered from heart failure. That patient died, and eight others were hospitalized. The potential legal implications were huge. The company suddenly faced a nightmare trifecta: regulatory, liability, and disclosure problems.
The lawyers took quick action. Management immediately announced that it was suspending testing of the drug on which it had pinned such hopes. A few weeks later, it announced that it was permanently halting testing, essentially writing off the huge investment. The company also said that it would make medical treatment available to all affected patients, compensate those affected by the drug, partner with the Food and Drug Administration to investigate the drug's safety issue, and make data on the compound available to other companies working on hepatitis C drugs. "There were a lot of legal concerns, but we moved really fast and did what was right," Leung says.
The transformation of Bristol-Myers is not complete, and in such a risky industry the company will inevitably encounter more challenges. But the legal team seems equal to them. "It's an amazing feeling to know you are part of somethingthat you're helping to build a company," says Campisi, who has decorated his office with Lucite plaques, framed tender offer tombstone ads, and even the Batman mask he never got to wearall from the many deals he's been part of. "I keep the deal toys around as souvenirs," he explains. "They remind me of the company pearls the legal department has helped to string."