The Week Ahead: GSK seeks relief from Puerto Rican ailment

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The Independent Online

It is a big week for those following the pharmaceutical sector, with GlaxoSmithKline, AstraZeneca, SkyePharma and Shire Pharmaceuticals due to post results in the next five days.

It is a big week for those following the pharmaceutical sector, with GlaxoSmithKline, AstraZeneca, SkyePharma and Shire Pharmaceuticals due to post results in the next five days.

GSK's figures on Thursday will be the main focus as they are likely to be dominated by the manufacturing problems at the group's plant in Puerto Rico.

At the beginning of last month, the US Food and Drug Administration seized stockpiles of the antidepressant Paxil CR and the diabetes treatment Avandament because of irregularities at GSK's manufacturing facility in Cidra, Puerto Rico.

Lehman Brothers believes the group may reach an agreement with the FDA over the issue, which will involve GSK paying a fine. The broker said this could range from $30m (£16m)to $500m, but some analysts warned it could be forced to pay up to $1.4bn.

Alternatively, GSK may continue to operate under the terms of the original sanctions imposed on it by the FDA. Investors fear the dispute could cause delays to the approval of GSK's pipeline of products unrelated to the Cidra facility. Lehman assured its clients that a review of past manufacturing problems for pharmas suggests this will not happen to GSK. The City expects the group to deliver first-quarter pre-tax profits of £1.6bn, up from £1.4bn last year.

TODAY: Results: Full year - 3DM Worldwide; Solitaire Group. Interims - Egdon Resources.

TOMORROW: First-quarter figures from BP should see the oil titan unveil a jump in profits of about 24 per cent to $4.3bn. Of interest to analysts will be comments from management regarding back tax at the group's TNK joint venture in Russia.

The venture was hit by a $1bn tax bill this month from the Russian authorities, which was reminiscent of the campaign that destroyed Yukos. But on Friday, John Browne, the chief executive of BP, seemed to have retained the support of President Vladimir Putin for the TNK deal while on a visit to Moscow, although the Russian leader made no specific reference to the tax claim.

In March, Whitbread announced the exit from its Marriott Hotels business. Against this background, the City will focus on the performance of the group's Premier Travel Inn and David Lloyd Leisure health clubs. Williams de Broë expects to hear that Premier Travel Inn is trading well, with the integration of Premier Lodge now complete, but it fears like-for-like sales at David Lloyd are still decelerating.

Regarding the future of Whitbread, the broker said: "We see negligible synergies between the businesses and believe that Whitbread should be broken up." Nevertheless, Williams de Broë forecasts the leisure conglomerate will deliver a healthy rise of about 10 per cent in profits, to £272m.

Results: Full year - Alexandra; NMT; Westbury; Whitbread. Interims - Reckitt Benckiser; Surfcontrol; Imperial Tobacco; BP; Amvescap.

WEDNESDAY: Credit Suisse First Boston was busy urging investors to exit Egg shares last week in the run-up to its first-half figures. It warned: "We believe Egg's first quarter results will lead to downgrades in City forecasts of about 15 per cent." The broker also slashed its price target on the stock to 80p from 100p.

CSFB is convinced the internet bank is up against lower volumes and growing levels of bad debt. It fears that these issues will become evident at Egg's results. The broker forecasts the numbers to reveal a fall in profits, to about £10m for the first quarter of 2005, compared with £20m for the final quarter of last year.

Results: Full year - European Motor Holdings; Gresham Computing; Intelligent Environments. Interims - Egg.

THURSDAY: AstraZeneca's first-quarter numbers will reflect the strong performance of products such as Nexium(an ulcer treatment) and Seroquel(a schizophrenia drug). The figures will also show that the effects of generic competition on AZ are largely behind it. Brokers hope the drugs giant will deliver a 24 per cent rise in pre-tax profits to $1.34bn.

Results: Full year - Blacks Leisure; The Body Shop; Brown & Jackson; SkyePharma. Interims - GSK; AstraZeneca; Punch Taverns; Shell.

FRIDAY: Shire Pharmaceuticals faces growing criticism over its plan to buy Transkaryotic Therapies and will have to answer its detractors when it posts first-quarter results. The company wants to pay £1bn for the loss-making US biotech, but the City is unimpressed by the proposal.

Since Shire unveiled the proposal on Thursday, its stock price has tumbled. Along with disquiet from institutional investors, the company has also come under attack from brokers. Among them was CSFB, which downgraded its recommendation on Shire.

Results: Full year - None. Interims - Shire Pharma.

Economics Diary

TODAY: UK - Gordon Brown addresses BCC Annual Conference. Germany - IfO business climate index (Apr). US - existing home sales (Mar).

TOMORROW: UK - CBI Quarterly Industrial Trends Survey. Japan - unemployment rate (Mar). Germany - leading institutions' spring forecasts for economy. US - consumer confidence (Apr).

WEDNESDAY: Eurozone - M3 money supply (Mar). France - business confidence (Apr). US - durable goods orders (Mar).

THURSDAY: UK - Nationwide house price index (Apr). Japan - interest rate decision; industrial production (Mar). Germany - unemployment (Apr). Italy - business confidence (Apr). US - GDP (1st estimate) Q1; weekly jobless claims

FRIDAY: UK - consumer credit (Mar); mortgage lending/approvals (Mar); consumer confidence (Apr). Japan - public holiday. Eurozone - inflation (Apr); business/consumer confidence (Apr). France - unemployment (Mar). Sweden - interest rate decision. US - personal income/ spending (Mar); Michigan consumer sentiment survey (final) Apr; Chicago PMI (Apr).

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