Newspaper article The Evening Standard (London, England)

Glaxo Joins the Sick List after Us Ruling on Labels

Newspaper article The Evening Standard (London, England)

Glaxo Joins the Sick List after Us Ruling on Labels

Article excerpt


MORE THAN [pounds sterling]4.3 billion was wiped off the [pounds sterling]87 billion market value of UK drugs giant GlaxoSmithKline today. Its price slumped 75p to 1422p with more than 30 million shares changing hands, making it the worst blue-chip performer.

It follows an instruction to drugmakers from the all-powerful US Food and Drug Administration to put warning labels on their asthma treatments, advising that they may trigger lethal attacks.

That includes GSK's best-selling Advair. Some brokers fear the warning will have an adverse affect on its sales in the US.

Broker Credit Suisse First Boston promptly downgraded GSK from outperform to neutral and slashed its target from 1575p to 1440p. It says the shares will continue to trade at a small discount until the impact of the FDA's decision can be gauged in prescription trends. It also warns the move has the potential to compromise growth prospects.

Sales of the drug should continue to advance, but CSFB has halved its growth rate forecast and now expects to see US sales of $2.24 billion in 2010, down from $2.93 billion.

WestLB has repeated its outperform recommendation and is sticking with its target of 1600p. It says Advair already contains warnings but concedes this latest move could lead to a temporary slowdown in prescription growth.

UBS continues to rate the shares a buy with a 1700p target while Japanese house Nomura says the revised labelling will have an impact on the ability of GSK to promote Advair as first-line therapy.

Dresdner Kleinwort Wasserstein has downgraded from outperform to neutral and says sales of Advair will fall, but not collapse.

Share prices generally rallied from opening falls but found it difficult to build on last week's gains that saw the FTSE 100 index touch a year's high 5531.5. Today, the index rose 0.8 to 5499.7.

Weekend reports that retailer John Lewis had been enjoying better trading conditions benefited Next which led blue-chips higher with a 25p gain to 1381p.

Publisher Reed Elsevier continued to lose ground in the wake of last week's trading update, down 61/2p at 518p. …

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