Glaxo Wellcome Interims Suffer At The Hands Of Sterling

UK drugs major Glaxo Wellcome is the latest to report a slow-down insales and earnings growth due to the strength of sterling. Presenting its first half-year 1997 figures last week, the company said underlying sales growth was 8% at constant exchange rates, and excluding sales of its lead drug Zantac (ranitidine), which is now starting to go off patent (Marketletters passim), turnover increased 14%. A dividend of 15.0 pence has been declared (the same as this time last year).

The actual results showed six-month sales at L4.11 billion ($6.90 billion), down 2%, trading profit at L1.58 billion, or 3% lower, pretax profits also down 2% at L1.52 billion and earnings per share 2% lower at 29.4 pence. Also lower were trading margins, at 38.5% compared with 38.8%, which has worried analysts and resulted in an immediate drop of 33.5 pence to L12.96 in GW's share price.

Speaking to journalists, GW chairman and chief executive Sir Richard Sykes noted two main features: the expected decline of Zantac and, offsetting this, the growth of new products. While Zantac turnover fell 12% in first-half 1997, sales of GW's other products - amounting to 80% of the business - rose by 14%. At its peak, Zantac accounted for 43% of group turnover. Details of GW's individual products and geographical performance will be published next week.