DISAPPOINTING prescription data for its blockbuster asthma and diabetes treatments left GlaxoSmithKline with the worst performance in a recovering FTSE 100.
The £86 billion drugs group ran into problems with Avandia, its diabetes remedy, last year when manufacturing difficulties prompted it to stop shipping Avandamet, a spin-off version, causing doctors to convert prescriptions into Avandia, which consequently suffered supply shortages. With stocking problems still dogging Avandia at the start of this year, GSK stopped promoting the drug and focused on Avandaryl, another refinement of Avandia. However, Avandaryl has not been able to pick up lost market share, meaning year-on-year growth in GSK’s diabetes franchise has been weak. That appears to have persisted into the second quarter, with poor numbers in April followed by this week’s figures showing a 14 per cent drop in Avandia prescriptions in May.
Separately, May data shows a 4.4 per cent fall in prescriptions for Advair, GSK’s asthma drug. Dresdner Kleinwort Wasserstein says such weakness was “somewhat expected” after a warning was added to labelling in March. The German broker expects prescriptions to accelerate this summer as the negative publicity surrounding the warning fades.
However, Jerry Brimeyer, analyst, says his forecasts for Advair will prove too high without a big pick-up in sales in the second half. That was also his view on Avandia, sales of which he does not expect to recover until next month, when GSK is due to step up its promotional efforts. Although Dresdner repeated its “buy” advice, it said it expected the shares to trade down on the prescription data, which they duly did, finishing 16p lighter at £14.58.
In contrast, Shire Pharmaceuticals advanced 47p to 747p, helped by JPMorgan, which repeated its 965p target ahead of tomorrow’s opening of the annual meeting of The College on Problems of Drug Dependence in Arizona, at which the Basingstoke-based company is due to present data on NRP104, the successor to its bestselling Adderall attention deficit disorder treatment.
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The wider market drew strength from recovering metals prices, which enabled the FTSE 100 to close 112.5 better at 5,619.3. Miners inevitably prospered, with Anglo American, up 132p at £19.89, receiving an extra fillip from Merrill Lynch, which moved from “neutral” to “buy” with a £21.50 target.
The session was not without off-the-wall bid rumours, the strangest being the suggestion that Dubai-based Emirates Airlines is casting an eye over British Airways, 20¼p better at 358½p. That tale appeared to take no account of the flag carrier’s ownership rules, which state British investors must speak for at least 51 per cent. Talk of predatory interest buoyed Aviva, 24½p dearer at 730½p after AXA’s £5.4 billion purchase of Winterthur.
Kingfisher perked up 4¾p at 225½p as Investec Securities pointed out that Bob Nardelli, chief executive of oft-rumoured predator Home Depot, has visted the retailer’s refurbished B&Q store in Luton.