Investment: Medeva faces another tough year
Thursday 11 February 1999
The company said that a collapse in sales of Methylphenidate, its best selling treatment for hyperactive children, contributed to a 47 per cent plunge in pre-tax profits to pounds 59.3m in the first half of the financial year. Revenues from the drug have been savaged by the entry of a new competitor, Schein Pharmaceuticals, in the tightly regulated US market.
The near 40 per cent fall in Methylphenidate's revenue was only partially offset by an 11 per cent rise in the rest of Medeva's portfolio. The figures sent the shares down 2p to 102.5p, well below their 330p peak reached in 1997.
The finance director, Garry Watts, said profits would fall again this year, hit by the continuing slide in Methylphenidate's sales. However, he added that profits would recover in 2000 as new products entered the market.
Industry analysts are not so sure. Medeva's biggest hope to counter Methylphenidate's terminal decline is Hepagene, a vaccine for hepatitis B to be launched in the middle of 2000. Sales could reach some pounds 200m a year, not a spectacular level but enough to fuel Medeva's profits for some time.
However, Hepagene could become a real moneyspinner if Medeva can get it approved as a treatment of hepatitis as well as a vaccine. A positive result from clinical trials could push Hepagene's earnings potential to some pounds 500m overnight.
Medeva's problem is that the rest of the pipeline, which includes asthma and cough treatments and cancer drugs, is not exciting. The chief executive, Bill Bogie, maintains that its strategy of picking up fledgling drugs from biotechnology companies and old treatments from big pharmaceuticals groups while spending little on its own research will yield benefits in the long run.
One City analyst disagreed: "This strategy is unproven. This company needs a big product to drive growth."
After the recent slide, the shares are on just nine times 1999 earnings, expected to be around pounds 54m. But unless a predator comes in with a takeover, it's difficult to see how they will go up before 2000. As one analyst put it: "This is a growth stock without growth."
- 1 School kitchen manager 'fired from Colorado school for giving hungry students free lunches'
- 2 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 5 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
Amber Peat: Body found in search for missing 13-year-old who left house after argument with her parents
Alton Towers crash: Four guests seriously injured as Smiler ride carriages collide
Charles Kennedy dead: A guy once asked the Lib Dem leader who his favourite Muppet was and his letter response was wonderful
Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...