SKB profits up as drug sales dive

THIRD-quarter results from SmithKline Beecham, the Anglo- American drugs and healthcare group, yesterday provided evidence of the way healthcare reforms are to affect pharmaceutical profits, writes Gail Counsell.

Although pre-tax profits were up in line with expectations, growth in drug sales was significantly below the same period last year.

Drug sales rose only 2 per cent, generating trading profits up 8 per cent. In comparison the same quarter last year saw pharmaceutical sales up 24 per cent.

Some of the difference was accounted for by abnormally high 1992 sales of its hepatitis B vaccine, Engerix B. But the company also stressed that profit growth was coming entirely from volume and not price increases, while regional figures demonstrated the relative slackness of the key US market.

Group third-quarter pre-tax profits rose 9 per cent at pounds 291m on sales 20 per cent higher at pounds 1.5bn, giving earnings per share of 7.5p, up from 6.7p. Nine-month profits were up 13 per cent at pounds 892m on sales up 25 per cent at pounds 4.4bn, pushing earnings up from 19.3p a share to 22.2p.

The dividend per 'A' share is 2.533p (2.075p). The results were in line with expectations and the shares rose 9p to 414p.