City: Drugs worry

THERE is usually more to the drugs industry than meets the eye. The news that AZT is not effective in delaying the development of Aids in HIV-positive patients almost certainly came as more of a shock to Wellcome shareholders, who saw the shares plunge 85p on Friday, than it did to many HIV patients themselves.

Particularly in the US, which accounts for most sales of Retrovir - Wellcome's brand name for AZT - there is already a surprising level of sophistication among HIV and Aids sufferers, and it is constantly growing. Aids groups have become experts both in the drugs on offer and those being developed. They attend drug company presentations on research. Aids newsletters with the latest medical developments are commonplace.

With nothing much left to lose, HIV and Aids patients are deciding in growing numbers to take part in clinical trials of the legions of new drugs being developed by other drugs companies, rather than take Retrovir, a known quantity. Retrovir, after all, held only limited benefits, so there are attractions in trying out untested drugs in the hope of finding something more effective.

The difficulties of marketing the drug to such a well-educated public partly explains why sales of Retrovir were already slowing before the latest study on its effectiveness was published. Sales of the drug rose by only 14 per cent last year - far from the huge increases that Wellcome's supporters had been predicting.

The price of Retrovir, meanwhile, has fallen by a third since it was introduced, and the recommended dosage has more than halved.

Ironically, this is quite good news for Wellcome shareholders. If Retrovir has been overrated as a wonder drug, the stock market's reaction last Friday was overdone. With the sector growing increasingly nervous as it waits for Hillary Clinton's healthcare reforms in the US, big price swings have become commonplace and Wellcome's shares should regain most of what they lost.

In the longer term, however, the company is looking short on promising new products. That, not Retrovir, is what the shareholders should be worrying about.

Jeremy Warner is on holiday