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."