Wellcome cites higher sales to fend off Glaxo

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The Independent Online
The £9bn bid from Glaxo for Wellcome stepped up a gear yesterday as Wellcome published higher-than-expected sales forecasts for four of its biggest drugs and the Wellcome Trust, its biggest shareholder, sought court consent to sell to Glaxo.

Wellcome predicted a 36 per cent increase in combined sales over the next four years for Zovirax and Valtrex, its herpes and shingles treatments, and anti-epileptic Lamictal and Aids drug Retrovir.

Wellcome said the expected growth rates for Lamictal and Valtrex, the sales of which are currently negligible, were better than the City was expecting and would more than make up for declining sales of Zovirax after its patent expires in 1997.

John Robb, chief executive, said the forecasts underlined the extent to which Glaxo's offer undervalued Wellcome. He also criticised the bid for being 30 per cent dependent on Glaxo shares which, he said, had "uncertain value" following last year's decline in earnings per share and falling sales of Zantac, Glaxo's biggest-selling drug.

Sir Richard Sykes, chief executive of Glaxo, poured cold water on the defence: "Wellcome does not dispute the commercial logic of our bid, nor the changes now taking place in the pharmaceutical industry which are driving its consolidation. Our offer is generous. It is the only offer and Wellcome shareholders should accept it now."

Mr Robb refused to be drawn on the state of negotiations with third-party potential bidders. He said it would be surprising if a buyer showed its hand much before the 28 February deadline set by the Wellcome Trust, after which it would irrevocably commit to accepting Glaxo's offer.

The trust was in the High Court yesterday for a hearing, adjourned until today, to determine whether it can reduce its holding below 25 per cent, the limit set by the court last time it sold a tranche of shares in a public offering in 1992.

Robin Gilbert, an analyst at Panmure Gordon, said the forecasts, which envisaged sales of the four drugs rising from £1.13bn last year to £1.54bn in 1998, were reasonable and in line with his own expectations.

Sales of Zovirax, which accounts for about 40 per cent of Wellcome's sales, are forecast by the company to peak this year at £942m before declining to £598m over the following three years.

Valtrex, its successor, however, is expected to increase its sales from just £18m this year to almost £300m by 1988.