New drugs cure SmithKline's Tagamet blues
While sales of Tagamet fell by £200m in 1994, turnover from new drugs, led by the Paxil/ Seroxat anti-depressant, climbed 74 per cent to £810m.
This performance, coupled with acquisitions, helped SmithKline to beat most analysts' forecasts with a rise in underlying pre-tax profits from £1.22bn to £1.271bn for 1994. The shares - already buoyed by US clearance to market Havrix, the world's first hepatitis A vaccine - gained 18p to 497p.
Steve Plagg, analyst at NatWest Markets, said total sales of £6.49bn, up from £6.16bn, were in line with expectations, but trading profits, up from £1.08bn to £1.24bn, came in stronger than forecast.
"The latter can be attributed to stronger than expected performance in hepatitis B vaccine Energix-B and Clinical Laboratories. We continue to advise our clients to be fully weighted in the stock," he said.
Analysts were also heartened by the US clearance for Havrix, which was launched in the UK two years ago and is now on sale in 35 countries.
Stated taxable profits were £691m, depressed by £580m of restructuring charges. The one-off cost, which had been expected and should be paid back in three years, follows the purchase of Sterling and comprised £243m for reorganising the supply chain, £320m for integrating the business, and £17m for integrating research and development.
Jan Leschly, chief executive of SmithKline, which is raising the fourth interim dividend from 3.3p to 3.9p, said: "Our financial objectives were accomplished in large measure through growing sales of new products." Earnings per share, excluding exceptional costs, were 8.7p, up from 8.5p.
Paxil, known as Seroxat outside the US, saw worldwide sales advance 124 per cent to £333m. This, and buoyant sales of the Relafen arthritis medicine and the Kytril anti-nausea drug helped pharmaceutical sales in the US to rise by 7 per cent.
Excluding Tagamet, sales in the US grew by 17 per cent. "We are very pleased with what is happening in pharmaceuticals," said Mr Leschly.
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