Bristol-Myers Squibb Co. (BMY) Friday said quarterly profit fell 16 percent on special charges and lower U.S. sales amid competition from rival brands and cheaper generics.

Analysts said jitters over expected profit declines in 2005 and 2006 and the anticipated lapse of patent protection for cholesterol drug Pravachol (search) sent shares 2 percent lower.

"People are concerned about the company's profit outlook for the next couple of years," said Deutsche Bank analyst Barbara Ryan.

The New York-based drugmaker posted a net profit of $758 million, or 38 cents per share, compared with a profit of $906 million, or 47 cents a share, in the same period a year ago.

Excluding special items, Bristol-Myers earned 44 cents per share. On that basis, analysts on average expected 39 cents per share, according to Reuters Estimates.

The special charges included $105 million related to accelerated depreciation and termination of employee benefits and $36 million for litigation.

Global sales rose 1 percent to $5.4 billion, but would have been unchanged if not for positive foreign exchange factors.

U.S. pharmaceutical sales fell slightly, hurt by increased competition for cholesterol fighter Pravachol and cheaper rivals to cancer treatment Paraplatin and Glucophage for diabetes.

Global sales of Pravachol plunged 24 percent to $598 million, following the summer launch of Merck & Co.'s (MRK) more potent Vytorin and clinical trials showing far better effectiveness of Pfizer Inc's (PFE) Lipitor.

The company is girding for the slated U.S. patent expiration in 2006 on Pravachol, which would open the floodgates to generics and decimate its sales.

Paraplatin sales fell 28 percent to $177 million, undermined by cheaper generics that became available earlier this year. The company said the drug's sales will likely fall farther in the fourth quarter.

But sales of Plavix, which prevents blood clots, soared 30 percent to $902 million thanks to its widespread use after heart attacks, strokes and procedures to clear clogged arteries.

Plavix (search), sold in partnership with French drugmaker Sanofi-Aventis (search) , is now Bristol's biggest product, having leapfrogged Pravachol.

Avapro, a treatment for high blood pressure also partnered with Sanofi-Aventis, saw sales jump 32 percent, to $241 million. Schizophrenia treatment Abilify jumped 63 percent to $165 million, helped by its better safety profile than rival treatments.

The company reaffirmed it expects earnings of $1.60 to $1.65 per share for full-year 2004, excluding special items -- down from $1.69 per share last year.

Bristol-Myers said growing sales of newer products like Plavix and Abilify, and revenues from medicines that will soon be approved, will likely offset declining sales in 2005 and 2006 of products facing generic competition.

Even so, Wall Street expects company earnings to drop 13 percent next year and fall again in 2006 because the drugs losing patent protection have had better profit margins than newer products.