It was unlikely that Glaxo would say it might, after all, meet the abandoned target of 10 per cent earnings growth this year as it unveiled 10-month figures yesterday. But it is reassuring that analysts didn't downgrade forecasts further. The expectation now is for 8 per cent earnings growth this year.
While sales of Zantac, the ulcer treatment now off-patent, continue to fall, the decline in sales of Imitrex, the migraine treatment facing stiffer competition in the US, has at least slowed. Sales of asthma and HIV drugs - Glaxo's key franchises - are growing.
The fiasco over the double-digit target is now in the past. Attention can turn to Glaxo's new drugs. Sir Richard Sykes, the chairman, says Lotronex is the star. Revenues should come in the second half of 2000. The market marked Glaxo shares slightly lower yesterday after the Food and Drug Administration committee approved Lotronex only for IBS sufferers with diarrhoea, not those with constipation - even though the former kind of IBS is the more prevalent.
The risk is Lotronex fails to meet cost-effectiveness targets in European countries. The ruling of the National Centre for Clinical Excellence that the government shouldn't provide Relenza, Glaxo's flu treatment, on the NHS, is not the best precedent. And pioneering this new market will also require hefty marketing investment.
Still, the group is continuing to invest in its sales teams, especially in fighting off competition in the tough US migraine markets. Sales of new HIV treatments should soon accelerate.
Next year also sees the launch of Seretide, a drug for the fast-growing asthma market. Further down the pipeline, Glaxo has a cardiovascular drug for launch in 2001 and a diabetes treatment in 2001. These should insulate Glaxo from patent expiries in 2004.
Nothing here resembles a blockbuster. But sometimes a lack of excitement is just what the doctor orders. Glaxo offers the combination of steady earnings growth from existing products and a decent pipeline, while the hope of merger activity should continue to underpin the share price. Analysts expect pre-tax profits of pounds 2.8bn and earnings of 55p per share this year, putting the shares, at 1,809p, on 33-times prospective earnings. That sounds expensive, but Glaxo looks the safest play among the UK pharma majors.