Wellcome suffers as Zovirax lets down City

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Wellcome's share price fell 51p to 550p yesterday as the City looked askance at interim figures that failed to deliver hoped-for underlying growth in the drug company's main product, Zovirax.

Although total sales of the herpes treatment rose 10 per cent in constant currencies to pounds 418m - more than a third of Wellcome's turnover - a price hike in the US was a significant factor. American sales of Zovirax, which account for almost half the total, grew by an underlying 14 per cent but the increase was only 8 per cent excluding the price rise.

Sentiment was also affected by sales of Retrovir, the anti-HIV treatment, which fell 16 per cent to pounds 110m. Retrovir has suffered from the negative preliminary conclusions of the Anglo-French Concorde study about its effectiveness.

However, the trading statement concluded that publication of the full Concorde data - expected after Easter - should have little further impact on sales.

Group pre-tax profits before exceptionals were up 12 per cent to pounds 364m in the six months ended February; the headline pre-tax figure was pounds 358.1m. Sales of pounds 1bn were up 5 per cent.

The interim dividend rises 3.8p to 8.6p a share. This is partly because the company is changing to a December year-end, which means final dividends will be received in May/June instead of January. But Wellcome also intends to cut dividend cover from last year's 2.7 times earnings - the industry average is 2.2 times.

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