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Good times roll

Positive trial results from TKT help to allay investor fears that Shire is paying too much for the US-based company

goodtimesBids and deals, both actual and prospective, drove the FTSE 100 Index towards a new three-year high of 5077.6, catalysed by big gains on oil and mining stocks. The peak is likely to be tested again as bids increase and there is still a long way to go before the market hits its all-time high of 6,930 reached on the last trading day of 1999.

The Bank of England may increase UK interest rates once more to stop UK inflation rising further but markets expect interest rates to be cut by the end of 2005.

Pharmaceutical companies have had mixed fortunes as the stock market absorbed fresh news on how well the sector is performing, including announcements of fresh revenue, new contracts and positive trials results - albeit against a backdrop of continued generic competition.

Up and away
Shire Pharmaceuticals rose more than 5 per cent after Transkaryotic Therapies (TKT) - the company it agreed to buy for $1.6bn - published positive phase III data for its Hunter syndrome treatment.

TKT's enzyme replacement therapy for Hunter syndrome, a rare genetic disorder, showed a significant improvement compared to placebo. The news has helped allay the fears of analysts and investors, both of which voiced concerned over Shire's plans to buy TKT, saying it was paying too much for a company with just two approved products.

Shire reacted to Teva Pharmaceuticals' plans to produce a cheaper version of Adderall XR, it hyperactivity treatment, by affirming its commitment to protecting the patents for the product.

Chromogenex joined AIM on June 20, raising £2m at 11p per share, which put a £6.5m price tag on the medical and cosmetic laser maker. The cash raised will go into the development of the company's pipeline treatments for cellulite and mild acne. Chromogenex is seeking to expand into global markets, particularly the lucrative US and Japanese markets.

Crestor loses US market share
AstraZeneca's (AZ) share price fell back as the market reacted to the news that cholesterol drug Crestor has lost market share in the US. Shares slipped following claims from the American Heart Association that Crestor causes double the side effects of rival drugs and subsequent negative media coverage.

Analysts pointed out that AZ is now on the horns of a dilemma over Crestor - should it keep promoting the drug to maintain market share and increase promotional costs, or cut back on marketing spending to maintain profits.

City analysts are also worried that the company's new diabetes drug Galida, which reported phase II data, offers no improvement over GlaxoSmithKline's drug Avandia.

In Europe, AZ is still fighting back against a £40m European Commission fine levied for extending the patent life of Prilosec following a six-year investigation.

The Commission maintains the pharma giant has driven competitors marketing alternative stomach ulcer drugs out of the market and has slowed access of generic competition. AZ has denied these conclusions and claims the Commission's analysis `is fundamentally flawed'.

Tougher times
Acambis is facing competition from Bavarian Nordic for a £493m US government contract to manufacture a weakened smallpox vaccine for vulnerable patients. Analysts believe that Bavarian Nordic, a Danish producer of the vaccine which is in a joint-development programme with GlaxoSmithKline, could impede Acambis' drive to get further US government business. Broker Numis Securities has changed its 'hold' for Acambis shares to `reduce'.

Drugs manufacturer Protherics posted a loss of £2.9m for the year ended March 30 2005 with sales of £18.84m compared to £21.02m in the previous year.

The fall in revenue was caused by currency changes and a reduction in a royalty-rate. Numis Securities is looking for pre-tax profits of £6m for the year to March 2006.

2nd September 2008

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