When a company chief executive promises to spend "whatever it takes" to establish a new product, his investors might be expected to make a sharp intake of breath.
Sir Tom McKillop of AstraZeneca made just such a promise over Crestor, the drug maker's new pill for lowering cholesterol. The drug is battling for market share against Lipitor, the biggest selling drug in the world, marketed by Pfizer, the biggest drug company in the world. Gulp.
He also promised to win 20 per cent of the market for this class of drug, that is, a fifth of a market already worth $20bn globally. It is a rich prize and the starter gun was fired yesterday in the US, the world's most lucrative pharmaceutical market, where Crestor was approved for use last month.
AstraZeneca has already spent millions trialling the drug, comparing it with Lipitor, readying wholesalers. No doubt there will be expensive consumer advertising, too. The track record of the salesforce should give investors confidence that Sir Tom's promises won't be missed.
So it is not with Crestor that the risks to AstraZeneca's toppy share price lie. Its previous successful mega-launch was that of Nexium a (slightly) improved version of Losec, the ulcer pill which lost patent protection and is now haemorraging sales to copycat rivals. There is a risk that generic Losec - particularly an over the counter version - will be eroding Nexium's growth just as the sales budgets are focused on Crestor.
There are bright spots and black spots among the smaller franchises. Seroquel, a growing schizophrenia drug, has beaten expectations. There has been positive trial data on Exanta, a new blood thinning product. But Casodex and Iressa, cancer treatments, have safety issues that might mean they can't meet hopes.
Crestor is likely to beat targets, but disappointments lurk elsewhere. The shares are trading at a giant premium to AstraZeneca's global peers and are too expensive. Sell.
Picture's on hold at Ulster TV
Ulster TV, the Northern Ireland-based media group, may be dwarfed by its ITV cousins Granada and Carlton, but it has managed to outperform both in recent years. Operating profit may have stood still at £7m in the first half of the year but television advertising revenues increased by 1 per cent compared with a 5 per cent drop for ITV as a whole.
The chief executive, John McCann, remains cautious about any predictions for television revenues further out than October but because the company is not heavily reliant on the London-based market, it is not as wildly cyclical as other ITV companies. It has also benefited from diversification, and the real growth potential here appears to be in the radio sector.
Following a number of acquisitions, the company is now the only radio business south of the border with more than one station. It is now a "one-stop shop" for radio advertisers across the whole of Ireland. The company has also entered the radio license lottery in mainland Britain.
The likely approval of the merger between Carlton and Granada could see a bid by the merged company for UTV but most believe this is three to five years away and is already built into the share price.
The company represents a solid investment with reasonable radio growth opportunities set against a background of continuing uncertainty in the television market. Up 2.5p to 322.5p, the shares trade in line with the sector average at 17.5 times this year's forecast earnings. Hold.
Fiddler makes for a mean buy
Justin Timberlake, REM and the Manic Street Preachers are helping to turn around Mean Fiddler, the music festival and tour promoter.
The company, which owns London's Astoria and Jazz Café as well as running the Glastonbury and Reading festivals, has been struggling with unprofitable businesses. But its shares yesterday leapt 22 per cent to 24p on news it has got rid of another loss maker, a country music radio station, for £1.5m. It has also bagged £1.65m from Islington Council, which has compulsorily purchased one of its sites. Mean Fiddler has banked over £5m in the past six months to recoup its £8.3m loss last year.
The company is now focussed on live music venues, festivals and tours for best-selling artists such as REM, which are growing and profitable. Glastonbury had a record year, with ticket sales of 115,000 at £105 each. Mean Fiddler has a 24 per cent stake in the festival, rising to 32 per cent next year and 40 per cent in 2005. Competition among festivals is increasing, but Glastonbury and Reading are well-established and will keep attracting big name bands - and crowds.
Mean Fiddler plans to expand and take its music venue brands, such as the Jazz Café, to other cities. Buy.Reuse content