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BRISTOL-MYERS SQUIBB/AXION OFFICE-BASED ONCOLOGY JOINT VENTURE

Executive Summary

BRISTOL-MYERS SQUIBB/AXION OFFICE-BASED ONCOLOGY JOINT VENTURE began operations Sept. 1 with more than 2,000 accounts. The Bristol-Myers/Oncology Therapeutics Network "will provide a cost- effective source for all oncology drugs and services to the rapidly expanding, office-based chemotherapy market in the U.S.," Bristol-Myers Squibb said Sept. 9. Terms of the joint venture were not disclosed. "The Network provides physician customers with tangible cost savings and drug procurement efficiencies and brings Bristol-Myers Squibb closer to these customers," Bristol declared. "This strategy is consistent with the pharmaceutical industry trend toward customer-focused alliances." The BMS/Axion agreement suggests that "customer-focused alliances" could become an axiom for success in the wake of the proposed Merck/Medco merger. The Axion deal is analogous to the Merck/Medco alliance, but on a smaller scale for a niche market. For Bristol-Myers Squibb, the joint venture allows the firm to take a more direct role in serving a growing segment of the oncology market. Axion estimates that 25% of the oncology market is now office-based and that that percentage is growing. Axion established the Oncology Therapeutics Network in October 1990 with the goal of bringing services supplied by hospital pharmacists in the in-patient oncology setting to the office-based oncology community. "The Network now offers...access to more than 600 anti-cancer drugs, supportive medications and supplies at competitive prices; extended payment terms to ease cash flow management; simplified product procurement; and comprehensive reports concerning usage and cost for efficient inventory management," Axion said. "The Network also continues to work closely with other producers of chemotherapy drugs to supply the complete needs of its oncology customers," Axion said. The network operates nationally through two distribution centers with plans for more. Prior to the joint venture, Axion had been a customer of Bristol-Myers Squibb, but, BMS said, Axion handled only a relatively small volume of its drugs. Under the agreement, the network will now be able to offer Bristol-Myers Squibb products at the company's direct-to-physician price while also providing Axion's added services, BMS said. Bristol said its direct-to- physician prices typically run about 4% below its other prices. Bristol said that it has no plans to reduce its oncoloy sales force. South San Francisco-based Axion is a privately held pharmaceutical service company founded in 1987 by former Cetus exec Michael Goldberg. Funding was provided by Seven Rosen Funds, of which Goldberg was a partner, and Kleiner Perkins. The firm employs 55 people.
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