kinase inhibitor for the treatment of lung cancer

Tanezumab     An anti-nerve growth factor monoclonal antibody for the treatment of pain

  Tasocitinib (CP-690,550) A JAK-3 kinase inhibitor for the treatment of rheumatoid arthritis

In December 2009, we discontinued a Phase 3 trial of figitumumab in first-line treatment of non-small cell lung cancer for futility. We continue to study figitumumab in 2nd/3rd line treatment in another Phase 3 trial, and an additional Phase 3 trial in first-line treatment is in the planning stage.

The Phase 3 clinical trial of apixaban for the prevention of stroke in patients with atrial fibrillation, a potentially significant indication, is event driven. As such, it is not possible to predict with certainty when the results of this trial will be available. BMS currently expects to have data from this trial in mid-2011 and to file for U.S. regulatory approval for this indication later in 2011 depending on the results of the trial.

In December 2009, we completed our sale of Vicuron, including dalbavancin for skin and skin structure infections, which is currently in Phase 3 development, to Durata Therapeutics.Additional product-related programs are in various stages of discovery and development. Also, see the discussion in the “Our Strategic Initiatives––Strategy and Recent Transactions: Acquisitions, Dispositions, Licensing and Collaborations” section of this Financial Review.

Costs and Expenses

Cost of Sales

Cost of sales increased 10% in 2009, while revenues increased 4% in 2009, and cost of sales decreased 28% in 2008, while revenues were flat in 2008. Cost of sales as a percentage of revenues increased in 2009 compared to 2008 and decreased in 2008 compared to 2007.

Cost of sales in 2009 increased compared to 2008 primarily as a result of:

• purchase accounting charges of approximately $970 million primarily related to the fair value adjustments to inventory acquired from Wyeth that subsequently was sold;

• the addition of Wyeth’s operations; and

• the unfavorable impact of foreign exchange on cost of sales, partially offset by:

• lower costs recorded in cost of sales related to our cost-reduction initiatives. Cost-reduction initiative charges incurred after the Wyeth acquisition, other than additional depreciation related to asset restructuring, are included in Restructuring charges and certain acquisition-related costs.

Cost of sales in 2008 decreased compared to 2007 primarily as a result of:

• asset impairment charges, write-offs and other exit costs associated with Exubera of $2.6 billion recorded in 2007;

• savings related to our cost-reduction initiatives; and

• the favorable impact of foreign exchange on cost of sales,

partially offset by:

• the impact of higher implementation costs associated with our cost-reduction initiatives of $745 million in 2008, compared to $700 million in 2007.

Selling, Informational and Administrative (SI&A) Expenses

SI&A expenses increased 2% in 2009 compared to 2008, primarily as a result of:

• the addition of Wyeth’s operating costs; and

• increased investment in potential high-growth and new opportunities for existing products, partially offset