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
EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.
- 1 Planes go hybrid-electric in important step to greener flight
- 3 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Orphan kangaroos spend Christmas without their parents
Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
New route to Mars could make manned mission much cheaper and easier
Isis 'did not shoot down Jordan war plane' before capturing pilot, says US
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...