Profits Warning From Nycomed

Norwegian pharmaceuticals company Nycomed has issued a profits warning, saying that it expects full-year profits for 1996 to be closer to those achieved in 1994 than those achieved in 1995. The firm said that this is a reaction to excessive expectations by analysts and investors, who have underappreciated the tough pricing pressure in the US contrast media market.

The firm's share price plunged almost 23% after the warning, which has sparked rumors of the company becoming a target for takeover or merger. Analysts are downgrading their forecasts accordingly. The share price has fallen 33% since its failed merger talks with Ivax (Marketletters passim).

The Financial Times' Lex column commented that Nycomed has been caught napping by its competitors. While the firm was negotiating the failed merger with the US company Ivax - thwarted by shareholders - and subsequently demerged, its competitors in the contrast media sector have been slashing prices in a market that is maturing.