The Investment Column: Amersham sees hope of a cure

Amersham International, the medical instruments to pharmaceuticals group, seems to have resolved the problems which wiped 7 per cent off its shares when it reported its interim results in November. The most important is there are now clear signs of an end to the malaise in the pharmaceutical industry which has hit sales of Amersham's research and laboratory equipment to the drugs giants.

The change in "tone" in the industry, evident in the second half, is already boosting sales of Amersham's technology and services. Its drug development services, used in testing and screening new pharmaceuticals, molecular biology, where Amersham leads the market, and genetic sequencing, increasingly used by drugs groups to short-cut the search for new drugs, reported sales growth of between 10 and 17 per cent last year. The improvement helped return Amersham's main life sciences division to growth in the second half. But group profits up from pounds 47.3m to pounds 50.8m owed most of their growth to foreign exchange benefits, which added pounds 4.5m to the bottom line.

Healthcare, the pharmaceutical and diagnostic division, has continued to grow on the back of Amersham's already strong position in nuclear medicine. The main Ceretec brain imaging agent saw sales dip 8 per cent to pounds 22.3m under the onslaught of competition from Du Pont's Neurolite, but Metastron, for pain caused by bone cancer, now sells nearly as well and the hope for the future is Myoview, the heart imaging agent. Amersham will receive a boost to earnings from raising its stake in the Japanese Nihon Medi- Physics to 50 per cent from October and give it a third of the world market for nuclear medicine.

The omens are better than they have been for some time for Amersham, but even profits of pounds 63m this year would put the shares, up 28p at pounds 10.43, on a prospective p/e ratio of 17. Hold.