Glaxo profits hit by strong pound

Glaxo Wellcome said yesterday the strength of the pound could cut as much as 5 per cent off the pharmaceutical giant's profits this year. Although Glaxo's sales rose 10 per cent in the first 10 months of the year at constant exchange rates, they were unchanged when converted to sterling.

In his final address as chairman to the annual general meeting, Sir Colin Corness said: "If exchange rates were to remain at their present level for the rest of 1997, the adverse impact on earnings for the whole year would be around 5 per cent."

However analysts were unfazed, saying the impact of sterling was anticipated and they were not changing their forecasts. Followers also were pleasantly surprised that Glaxo's sales growth, excluding ulcer blockbuster Zantac, which comes off patent this July, was 15 per cent in constant currency. They said Zantac's sales also fell less fast than anticipated over the period, declining by 7 per cent. One analyst said: "Fifteen per cent underlying sales growth is first class. That puts Glaxo in the same league as players like Merck, Pfizer and SmithKline."

However in a depressed market, the group's share price fell 2.5 per cent to pounds 12.51.

Also at the meeting, Sir Richard Sykes, deputy chairman and chief executive, confirmed to animal rights activists that the group was no longer awarding business to the Huntingdon Life Sciences drug testing group. This followed a damning undercover television programme showing some of Huntingdon's employees mistreating dogs.

Sir Richard said: "There is no place for this behaviour in biomedical research. After the programme we decided not to place further contracts with the company. We await a Home Office report before we decide whether to continue business."