Wellcome puts aside pounds 52m for set-up

WELLCOME has put aside pounds 52m to cover the set-up costs of its joint venture with Warner Lambert to sell its medicines over the counter, writes Gail Counsell.

The size of the provision raised eyebrows in the City. Some analysts had expected the costs to be nearer half that amount.

Pre-tax profits from the drug company for the four months to end-June, up 12 per cent at pounds 182m (before the pounds 52m exceptional charge) and 10-month profits up 12 per cent at pounds 546m (before a comparable pounds 58m exceptional charge) were in line with expectations.

The odd reporting period is because the company is changing its year-end to December.

Turnover in the four months of pounds 690m, up 13 per cent, compared with an 8 per cent rise to pounds 1.8bn in the 10 months. Movements in exchange rates boosted profits performance by 2 per cent.

John Robb, chairman and chief executive, said the results were in line with expections. Margins of 25.5 per cent had been maintained over the comparable period a year previously, he added. The March-June period usually has lower sales, and lower margins, than other periods.

Sales growth was driven by increased sales of Wellcome's anti-viral drug Zovirax - prescriptions for shingles have risen 13 per cent since February, despite the introduction of a competing treatment.

The company said over-the-counter sales of Zovirax for cold sores also continued to grow. But it reported an expected steep fall in sales of its anti-Aids drug Retrovir, which suffered badly from an adverse study into its effectiveness.

Over-the-counter products accounted for pounds 132m of sales, including Wellcome's share of sales from the Warner Wellcome joint venture, which began in North America in January, and in Europe and Australasia in June.

Earnings per share excluding exceptionals rose 11 per cent to 12.7p. The second interim dividend is 5.8p (5.8p).

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