New York Share Prices

NEW YORK: share prices were more buoyant in this reporting period than the last, driven early on in the week by gains by the US dollar and the bond market. Midweek, the equity market became jittery when interest rate worries set in. The Dow Jones Industrial Average did lose some of its gains but still managed to close the reporting week ahead, resisting the slide on the bond market. One industry observer commented that US investors appear to be torn between the inflationary threat and the promise of growth.

The drug group underperformed the market for the first four months of the year, noted Robert Uhl of Salomon Brothers, who told the Marketletter that since the fundamentals of the group have continued to improve, the earlier lagging at the beginning of the year sets up the sector for a stronger performance now through the second half of the year. Mr Uhl has a "strong buy" out on American Home Products, a climber this week, which he says is "a wonderful company." AHP is meeting its cost savings goals and integration plans for American Cyanamid, he noted, and is also introducing some new products. Chiron and Cephalon both declined, the latter to a greater extent, when US analysts at Smith Barney repeated that they do not see the US Food and Drug Administration approving Myotrophin (recombinant human insulin-like growth factor-1; somatomedin C), a treatment for amyotrophic lateral sclerosis. The two companies are working in partnership on the product and will split 50/50 the development costs and sales. A few days later, an FDA advisory panel backed early access to the product but made it clear that it wanted to see another clinical trial done to confirm effectiveness (see page 19). Meirav Chovav of Salomon Brothers said that the fact that the companies are not going to charge for the drug under the treatment Investigational New Drug is problematic. Ms Chovav is recommending Amgen, Biogen, and Centocor, which look attractive in terms of valuation and technology. She said that selectivity is the key for those looking to invest in the biotechnology group.