Investment: Medeva faces another tough year

MEDEVA, Britain's fourth largest drug company, yesterday warned its long-suffering shareholders to prepare for another year of hardship as it revealed a slump in interim profits.

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."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test