View from City Road: Delicate choice at SmithKline Beecham

The appointment of Jan Leschly as chief executive-elect of SmithKline Beecham says more about the company's continuing need for fair representation of the two component parts than about strategic change. The merger of SmithKline Beckman and Beecham - which has gone much better than many had feared - was a careful blending of two potentially explosive corporate cultures. And to keep both sides happy, SKB retained two highly expensive chiefs, even though the younger partner, SmithKline Beckman's Henry Wendt, 59, has had a much-reduced role over the last year or so and Bob Bauman, 62, from Beecham has clearly been running the shop.

Rather smartly, SKB recruited an outsider as heir apparent, so giving nobody in the group the feeling that either the SmithKline or Beecham side was gaining the upper hand. The trouble with this structure is that once either Mr Wendt or Mr Bauman decided that the attractions of the golf course were too tempting, the other also had to grab his golf cart and wave goodbye to his creation. But worries about instability resulting from two simultaneous departures have been reduced by the year-long handover period.

The choice of Sir Peter Walters as chairman, albeit non-executive, will however do little for shareholders familiar with BP or Midland Bank.

So where does this leave SKB? By the time Mr Leschly takes over next April, the merger will be five years old. The early upheavals caused by cost-cutting took a year or so to wash through, the pruning of the portfolio took a little longer and it took another year or so to prove that bringing together the research departments was able to remove many of the blockages in the individual companies' drug pipelines.

SKB is in rude health, not withstanding the worries all drug companies have ahead of the announcement of the Clinton administration's health reforms. Its drug pipeline is impressive and its ability to market older treatments, such as Tagamet for ulcers and the antibiotic Augmentin, is second to none.

SKB shares slipped 3p to 446p yesterday. Few people want to buy drug companies yet, but if you do want to take the risk, SKB is a good bet.