The yardsticks by which analysts measured the group's performance were at the upper end of its sector but not above it, he said. "Most of the share price is justified on fundamentals and contains no bid speculation within it," he claimed.
Despite news of a 15 per cent rise in underlying profits before exceptionals to pounds 1.01bn for 1996, the shares fell from the all-time peak hit on Monday, dropping 42p to pounds 18.605. Dealers blamed profit-taking after their strong performance this year and worries that Zeneca had only one drug in its late-stage development pipeline.
But the group reiterated its aim of achieving average annual earnings growth of 15 per cent over the next five years by building a leading position in anti-cancer drugs and certain agrochemicals, while enhancing its position in other drug areas. Sir David attempted to calm fears about the group's Macclesfield plant, which manufactures Zoladex, the big-selling anti-cancer drug, where the US Food and Drug Administration has identified problems with the manufacturing process. Sir David said 20 inspections of the plant had been completed by a variety of regulators over the past 12 months. "We are confident the few remaining outstanding issues can be resolved with the FDA to their satisfaction and we hope these issues will be resolved by the end of the month," he said.
The group said it had 18 new products under development, excluding the Zomig anti-migraine treatment acquired from Glaxo last year, which has won UK approval, and the Seroquel schizophrenia treatment due for launch this year. Pharmaceuticals profits grew 10 per cent to pounds 757m, or 6 per cent excluding exchange movements, but Zeneca warned margins would continue to be constrained by the development and marketing costs of new products. The group plans to raise its US sales force from 1,200 to nearly 2,000 this year.
Zestril, the group's heart drug which goes off patent in 2001, grew sales 11 per cent to pounds 547m in 1996, while Zoladex was up 28 per cent at pounds 333m.
Operating losses in the seeds business, now part of a joint venture with a Dutch group, were cut from pounds 48m to pounds 3m. Meanwhile, restructuring of the speciality chemicals operations, shorn of the specialty inks and textile colours arms last year, pushed profits up a quarter to pounds 70m.
Investment column, page 20