Amersham warns on threat to R&D

Worries over future earnings growth at the world's big pharmaceuticals companies are putting pressure on their research and development spending, according to Amersham, the research equipment supplier.

Amersham's highly rated shares slid more than 6 per cent on its disappointing trading update yesterday, when it missed market forecasts for sales in the first three months of the year.

These were £381m, up 5 per cent, compared to a consensus forecast of just over £400m.

The statement cited a string of factors for the disappointment, including currency fluctuations, Japanese deflation and unusually strong December sales of products for use with medical scanners, whose prices were increased at New Year's.

It said sales of drug discovery products, sold to academic institutions and big pharmaceuticals firms, were also hit.

Sir William Castell, chief executive, said: "There is some caution over spending by big pharmaceuticals companies. They are not telling us that they are cutting research and development, but there seems to be far greater controls on spending than there have been before, with capital projects requiring higher levels of authorisation."

A number of global pharmaceuticals companies have been forced to issue profit warnings in recent months, as some of the industry's biggest-ever patents expire, exposing their best-selling drugs to copycat competition. Evidence is building that they are responding to the challenge by tightening up on research and drug development spending, and a number of Amersham's competitors have seen their profits decline.

Amersham shares fell 41.5p to 636.5p, making them the worst performer in the FTSE 100.

There was also disappointment with sales of brachytherapy seeds, radioactive implants for treatingprostate cancer, where competition is driving down prices. Sir William said the seeds account for just 5 per cent of group sales, and promised the group would still meet expectations for the full financial year.