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