Bottom Line: Competition provides a Wellcome sales boost

FAR from hurting sales of Wellcome's Zovirax, the UK launch in February of SmithKline Beecham's Famvir, a competing shingles treatment, appears to have been a boost for the blockbusting drug. Wellcome's figures suggest that SKB has achieved only a 15 per cent share of the UK shingles market, which in turn has expanded by about 30 per cent.

SKB contests Wellcome's figures - it says its rival has about 25 per cent of the market for certain types of preparation. Either way, Zovirax sales growth was higher than expected at 17 per cent in the four months ended June.

Sales in the period of pounds 290m, out of a total pounds 690m, compared with pounds 688m out of pounds 1.8bn in the comparable 10 months, suggest sales are indeed accelerating.

Profits in the longer term, given higher marketing costs and possible price competition, may be another question. And sales of Retrovir, its high-profile Aids drug, were disappointing, due to the negative Concorde study of its effectiveness, falling 17 per cent to pounds 62m in the quarter and 16 per cent to pounds 172m in the 10 months.

The City is becoming a little more enthusiastic about Wellcome, with some analysts talking about restoring it to a market rating, implying a share price of about 680p compared to yesterday's close of 605p, down 10p.

A market rating, given that Wellcome is unlikely to match the market on earnings growth, does sound like wishful thinking. Moreover, Wellcome remains less attractive on fundamentals than SmithKline Beecham or Glaxo. That much-denied bid-merger would change the picture dramatically, however.