Short-Term Difficulties For Medeva?

Although in the longer term, analysts at Morgan Stanley believe Medevaof the UK to have a pipeline that will produce some interesting products, such as vaccines and gastrointestinal products, they have forecast a short-term sales decline for methylphenidate, used to treat attention deficit hyperactivity disorder in the USA, before sustained-release and optical isomer versions of the product reach the market.

The analysts are rating the company as "neutral" until it is clearer as to how the firm's earnings will look in 1998 and 1999. At the moment, they are forecasting pretax profits in 1997 of L122.5 million ($199.4 million), with earnings per share of 25 pence. In 1998, they estimate that pretax profits will fall back to L115.6 million, and that EPS will be 23.6 pence and in 1999, pretax profits are forecast to reach L105 million with EPS of 21.6 pence. In 1996, Medeva achieved pretax earnings of L103.5 million, and EPS of 20.8 pence.

The analysts expect to see a pick-up in the year 2000, with pretax earnings rising to L119 million, and EPS climbing to 24.35 pence. By the start of the new millennium Medeva should be feeling the effects of its hepatitis B vaccine, Hepagene, reaching the market, along with launches of new formulations of methylphenidate.