City underwhelmed by Glaxo's $1bn blockbuster drugs

Glaxosmithkline, the UK's biggest drug maker, yesterday lifted the veil on its pipeline of 147 new products and said it expected at least 20 of them would become blockbusters with annual sales of more than $1bn (£580m).

At the company's long-awaited "research and development day", Jean-Pierre Garnier, the chief executive, claimed "enormous creation of value is just around the corner" and promised a record number of product launches in the next five years.

The City was underwhelmed, however, and was particularly disappointed that a promising new cancer treatment had failed to work on colorectal tumours and would be delayed a year.

Dr Garnier and his head of research, Tachi Yamada, picked out potential new painkillers, asthma and heart disease treatments and a vaccine against cervical cancer as highlights from the company's pipeline. The pair have been under pressure to produce results from the restructuring of GSK's research operations into specialist "centres of excellence" which compete for central and aim to emulate entrepreneurial biotechs.

Dr Garnier said: "We decided to take a different pathway and embarked on a radical re-engineering of research and development. Three years on, we are absolutely thrilled with the results, and success is obvious."

GSK shares closed down 19p at 1,311p on poor news about a new product that blocks two chemicals that tumours need to grow. The product, codenamed 572016, was still highlighted by the company, but it is not now expected to file for approval until 2005 and it is not clear why the product does not work against cancers of the colon.

There was also City disappointment that just a handful of drugs had progressed into the third and final phase of human trials, but Dr Garnier rejected the criticism that too many of GSK's products were still in their early stages. The company was extending phase two studies to improve the chances of success, he said. "It is too expensive to fail in phase three by taking short cuts."

Some attendees at the R&D day, which was held at London's Imax cinema, expressed the view that GSK was still a "jam tomorrow" company. But CSFB's Steve Plag, the UK's top rated analyst of the pharmaceuticals sector, is expected to raise his valuation of the GSK pipeline from 526p a share to about 720p as a result of the information presented yesterday.

Mike Ward, of the newly formed specialist broker Code Securities, said investors would welcome the company's new-found willingness to "name a few names" of potential blockbusters in its pipeline.