SmithKline concentrates on organic growth

SmithKline Beecham poured cold water yesterday on speculation that it was poised for a major acquisition following the consolidation earlier this year of two types of equity into one share class.

The move might have been a prelude to a rights issue funded deal, but Jan Leschly, chief executive, said the company planned to concentrate on organic growth following two large acquisitions in 1994.

He was speaking as the drugs and consumer healthcare group announced better than expected second-quarter profits of pounds 342m, up from pounds 300m in the same period last year. The rise in profits was driven, the company said, by sales growth, mainly from new products accounting for almost a third of the pharmaceutical sales. These products, which include Seroxat, an anti-depressant drug that saw sales rise 59 per cent, form part of a drive by SmithKline to generate more than a quarter of its sales from products that did not exist five years ago.

New products sales reached pounds 370m during the quarter, up 46 per cent at comparable exchange rates. In the first six months these kinds of treatments were worth pounds 702m in sales, a 37 per cent rise on the first half of 1995.

Both sales and trading profits from consumer healthcare products also saw a rise, of 22 per cent. SmithKline increased its exposure to consumer brands with the acquisition two years ago of Sterling Winthrop's consumer operations.

Investment column, page 18.