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Zimmer Inc. will no longer be a part of Bristol-Myers Squibb, it was announced this morning.
In a formal statement released today, Ray Elliott, Zimmer president, said, "Given the immensity and complexity of the pharmaceutical business, we believe Bristol-Myers Squibb's strategic decision to concentrate on pharmaceuticals was the correct one and is likely to create greater opportunities for Zimmer in the future. We are looking to expand beyond our core strengths in implants into other rapidly growing orthopedic markets."
Zimmer personnel were involved in the BMS decision, he said later in a phone interview.
"We helped work with BMS on this decision. We're pleased and excited about this decision," he said.
"Orthopedics is getting more competitive," he said. "In order to play to win, you need to invest heavily in the orthopedic business or leave the business."
Reuters News Agency reported this morning that Bristol-Myers Squibb also "will shed its lower-performing Clairol beauty care division. ..." in addition to Zimmer.
Reuters said the move is part of the BMS plan to meet or exceed earnings targets for 2001 and to "solidify its presence in Japan and Europe as part of its new growth strategy."
The same report said Bristol-Myers Chief Executive Charles Heimbold said the company made the move so it could place greater focus on "its core, higher-margin pharmaceuticals business."
According to Reuters, Zimmer posted an 11 percent sales increase in the second quarter over the same period in 1999. Clairol, however, had second-quarter sales that were down 6 percent from the comparable period last year.
Elliott said they have no buyers now, no discussions with potential buyers are under way and "there are no front-runners."
"It is highly unlikely it will be another orthopedic company," he said, and the possibility also exists that the company could go public.
Elliott refused to speculate on how much the company might be worth to a prospective buyer.
Zimmer has approximately 1,400 employees in the Warsaw area, he said, and more than 3,000 worldwide.
Local employees were told at 9 a.m. about the change, at the same time BMS was making the news public.
"We're obviously asking people to stay focused," Elliott said. "I think it'll make a difference but I think it'll be a positive one. I think we have a chance to flourish in orthopedics, ... the opportunity to play to win."
Only about eight to 10 local employees work directly for BMS, he said. The rest of the workforce should be unaffected by the change.
The process could take several months to complete, Elliott said.
Asked if he is going to stay in Warsaw, Elliott said: "You bet. This is my home. That's a commitment I made for the long haul."
