Underlying Growth Healthy At GW Despite Strong L

Half-year results from the UK's largest drugs company Glaxo Wellcomewere significantly affected by the strength of sterling, coupled with a decrease of 12% in worldwide sales of its leading antiulcerant Zantac (ranitidine; Marketletter August 4), but there was broad agreement among analysts with the comments of chairman and chief executive Sir Richard Sykes, who said that the underlying growth rate was healthy, as a result of the company's "much wider, better balanced portfolio."

New products (introduced since 1990) accounted for 31% of sales and grew 50% on a comparable basis, underlining the concerted shift by the company from older to newer drugs. This is all the more evident given that respiratory drugs, representing 22% of sales, have become the key driving force in GW's portfolio. Significantly, sales of new respiratory products, such as Serevent (salmeterol) and Flixotide (fluticasone), increased in total by 43% to L447 million ($728.6 million). Turnover of long-established Ventolin (salbutamol), on the other hand, declined in North America and Europe in the face of generic competition.

GW's antiviral franchise increased 32% to L754 million, driven by strong sales of Epivir (lamivudine) and Retrovir (zidovudine), which now represent 54% of the HIV therapy market. In the herpes sector, sales of Zovirax (aciclovir) dropped 5% to L353 million, its patent having now expired in most major markets, although the company expects sales of Valtrex (valaciclovir), a successor product, to offset its decline to some extent.