Bristol-Myers Squibb  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  EXECUTIVE SUMMARY  $^{ }$Highlights  $^{ }$Business Environment  2 $^{ }$In the pharmaceutical/biotechnology industry, the majority of an innovative product’s commercial value is usually realized during its  market exclusivity period. Afterwards, it is no longer protected by a patent and is subject to new competing products in the form of  generic brands. Upon exclusivity loss, we can experience a significant reduction of that product’s sales in a short period of time. $^{ }$The pharmaceutical/biotechnology industry is highly competitive and subject to numerous government regulations. Many competitive  factors may significantly affect sales of our products, including product efficacy, safety, price, demand, competition and cost- effectiveness; marketing effectiveness; market access; product labeling; quality control and quality assurance of our manufacturing  operations; and research and development of new products. To successfully compete in the healthcare industry, we must demonstrate  that our products offer medical benefits and cost advantages. Our new product introductions often compete with other products  already on the market in the same therapeutic category, in addition to potential competition of new products that competitors may  introduce in the future. We manufacture branded products, which are priced higher than generic products. Generic competition is one  of our leading challenges.  $^{ }$Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified  items which represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For a  detailed listing of all specified items and further information and reconciliations of non-GAAP financial measures see “—Non-GAAP  Financial Measures” below.  $^{ }$The following table is a summary of our financial highlights:  $^{ }$The following key events and transactions occurred during 2012 as discussed in further detail in the Strategy, Product and Pipeline  Developments and Results of Operations sections of Management’s Discussion and Analysis:  Bristol-Myers Squibb Company (which may be referred to as Bristol-Myers Squibb, BMS, the Company, we, our or us) is a global  biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over  serious diseases. We license, manufacture, market, distribute and sell pharmaceutical products on a global basis.  • Our net sales and earnings declined as a result of the loss of exclusivity of  Plavix  (clopidogrel bisulfate) and  Avapro / Avalide (irbesartan/irbesartan-hydrochlorothiazide).  • We received significant regulatory approvals pertaining to  Eliquis  (apixaban) for stroke prevention in patients with  nonvalvular atrial fibrillation (NVAF),  Forxiga  (dapagliflozin) and the  Orencia  (abatacept) subcutaneous formulation.  • We acquired Amylin Pharmaceuticals, Inc (Amylin) and expanded our diabetes alliance arrangement with AstraZeneca PLC  (AstraZeneca) to include Amylin-related products.  • We discontinued the development of BMS-986094 (formerly INX-189), a compound which we acquired as part of our  acquisition of Inhibitex, Inc. (Inhibitex) to treat hepatitis C virus infection, in the interest of patient safety, which resulted in a  $1.8 billion pre-tax impairment charge.  Year Ended December 31, Dollars in Millions, except per share data 2012  2011 2010 Net Sales $  17,621  $  21,244 $  19,484  Total Expenses   15,281   14,263  13,413  Earnings before Income Taxes   2,340   6,981  6,071  Provision for/(Benefit from) Income Taxes   (161)  1,721  1,558  Effective tax/(benefit) rate  (6.9) %  24.7  %  25.7  % Net Earnings Attributable to BMS  GAAP   1,960   3,709  3,102  Non-GAAP   3,364   3,921  3,735  Diluted Earnings Per Share   GAAP   1.16   2.16  1.79  Non-GAAP   1.99   2.28  2.16  Cash, Cash Equivalents and Marketable Securities   6,352   11,642  9,982 