Sun, Jul 27, 2003 - Page 10 News List

Europe gets high on drug companies

RELIABLE INDUSTRY Analysts say that the pharmaceuticals industry is one area of the economy which often weathers even the most difficult economic tribulations


European drugmakers advanced this week after GlaxoSmithKline Plc, Europe's biggest pharmaceutical company, AstraZeneca Plc, the second largest, and Roche Holding AG raised sales and profit forecasts.

Cie de Saint-Gobain SA, the world's biggest glassmaker, and DSM NV, the largest maker of drug ingredients, paced the week's declines among some exporters as the dollar slipped 2.7 percent against the euro to its lowest in three weeks.

On Friday, the Dow Jones Stoxx 50 Index dropped 29.55, or 1.2 percent, to 2407.11, trimming its advance for the week to 0.1 percent. The Stoxx 600 declined 0.8 percent to 205.79, cutting the weekly gain to 0.3 percent.

Drug companies led gains among the Stoxx 600's 18 industry groups. GlaxoSmithKline, Roche and AstraZeneca were among the top 10 performers on the Stoxx 50 after reporting profit that beat analysts' estimates because of sales growth and cost cuts.

"It shows the darkest period is over for big pharmaceuticals for a while," said Youri Amerijckx, who manages US$460 million of healthcare stocks, including Roche Holding, at KBC Asset Management, Belgium's largest asset manager by market share.

Before this week, the Stoxx 600 Healthcare Index had dropped 1.8 percent in 2003, while the Stoxx 600 gained 1.7 percent.

Benchmark indexes fell in 13 of the 17 Western European markets on Friday. Germany's DAX slipped 0.5 percent. The UK's FTSE 100 declined 0.4 percent, and France's CAC dropped 1.5 percent.

September futures on the Dow Jones Euro Stoxx 50 Index of companies based in the 12 countries sharing the euro shed 0.9 percent to 2452. The index dropped 1.6 percent to 2442.13.

Drug companies

GlaxoSmithKline was the fourth-best performer in the Stoxx 50 this week, climbing 4 percent. Europe's biggest drugmaker said Wednesday full-year earnings per share may exceed the "high single digit" growth it forecast in April. The shares slid 1.3 percent to UK Pound 12.15 on Friday.

AstraZeneca, Europe's second-biggest drugmaker, climbed 2.6 percent this week. The company boosted its full-year outlook after second-quarter profit fell less than analysts expected. The stock dropped 0.6 percent on Friday to UK Pound 24.94.

Roche, the world's biggest maker of cancer drugs, slipped 1.3 percent to 111.25 Swiss francs, for a 3 percent weekly gain. The company Wednesday raised the estimate for its Mabthera blood-cancer medicine to Sf4.5 billion (US$3.3 billion) and for Pegasys, a hepatitis C treatment, to Sf2 billion.

"Drug developers provide defense against all the economic uncertainty out there and on top of that they are releasing good earnings: that makes them a good bet," said Miguel Angel Castro, who helps manage the equivalent of US$577 million at Renta 4 SA in Madrid, which recently bought AstraZeneca shares.

Dollar hurts some

A declining dollar might outweigh any benefit to European companies from an expanding US economy, eroding earnings generated in the US and making their products more expensive.

Saint-Gobain, founded in 1665 to produce mirrors in French King Louis XIV's palace in Versailles, slipped 1.8 percent to 33.10 euros, for a weekly slide of 4.2 percent. The company, whose products include perfume bottles and roof shingles, expects full-year profit to drop after first-half earnings fell 5.6 percent to 470 million euros (US$541 million).

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