Glaxo calms fears over loss of Zantac patent
Friday 07 March 1997
Sir Richard Sykes, the chief executive who will take over the chairmanship in May, warned that sales of Zantac, just under a quarter of the group total last year, could plunge by as much as 80 per cent after the patent expires in July.
But in a clear message to analysts who have suggested earnings at the group could go into reverse, he said he expected turnover growth to be back up in double-digit percentages by 1999, while earnings would be "at least maintained" over the next two years.
Products introduced since 1990 hit sales of pounds 2bn last year, overtaking Zantac for the first time, Sir Richard said. "Sales of new products give us confidence as we go forward into 1997 and 1998, which will be tough years. Even under the worst-case scenario for that business, we can grow the business in low single-digit numbers and once we get through 1998, we have confidence we can grow in double digits."
The outcome of Glaxo's appeal against a US court ruling allowing rival drugs group Novopharm to sell a generic form of Zantac is expected shortly. Sir Richard said Glaxo would announce strategies for dealing with the competition, which would only hit around 10 per cent of the group's sales, by July.
The shares, which initially dipped 28.5p yesterday, ended 14p ahead at pounds 10.49.
One analyst said for the first time the company had looked over to the other side of the Zantac chasm: "Today could mark an important turning point at Glaxo in that the stock market may now start to focus on life beyond Zantac."
Steve Plag at Barclays de Zoete Wedd, the stockbrokers, said sales growth excluding Zantac was 14 per cent last year, led by products introduced since 1990. Between now and the end of the century, the company would launch another 20 drugs, he said. "We all know 1997 is going to be a very, very tough year, but by 1999, this company is going to look very, very different."
Sir Richard's comments came as Glaxo Wellcome announced pre-tax profits of pounds 2.96bn for last year, 18 per cent ahead of the figure for the 12 months to December 1995, excluding the costs of integrating Wellcome. The results covered the first full year since the pounds 9bn acquisition of the drugs group. John Coombe, Glaxo finance director, said the integration was "bang on target", delivering pounds 150m of savings last year. Most of the 7,500 planned cut in the combined groups' workforce had been achieved, and the focus was moving from research and development activities to manufacturing operations.
Glaxo said sales of anti-HIV products more than doubled to pounds 500m last year.
Investment column, page 23
Animals found with 'puncture holes the size of a human finger'
Video: The official full-length trailer for the Jurassic Park sequel has dropped – two days early
- 1 Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
- 2 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 3 Black Friday 2014: Opening hours for John Lewis, Asda, PC World, GAME and Argos
- 4 Bill Cosby: Isn’t it obvious why his accusers have stayed silent up until now?
- 5 Jeremy Hunt: 'I took my children to A&E because I didn't want to wait for GP appointment'
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Sarah Vine on Jack Monroe being a lesbian mother: 'If she was unsure about her sexuality, she should have taken greater precautions'
Black Friday 2014: Opening hours for John Lewis, Asda, PC World, GAME and Argos
Michael Brown shooting: Ten things we know – or know better – now the Ferguson grand jury's work is over
Ferguson riots: The most powerful images to emerge from protests over Michael Brown killing
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Revealed: How the world gets rich – from privatising British public services
Exclusive: UK approved £7m Israeli arms sales in six months before Gaza conflict
iJobs Money & Business
£Attractive: Citifocus Ltd: High calibre individual with significant product d...
£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...
£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...
£Attractive: Citifocus Ltd: High calibre individual with superior academics an...