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Pharma stands firm in fragile stockmarket

The UK stockmarket, while fragile, has steadied itself. No more massive debts have been discovered among banks or hedge funds and the media is busying itself by examining MP's expenses

Pharma stands firm in fragile stockmarket

The UK stockmarket, while fragile, has steadied itself. No more massive debts have been discovered among banks or hedge funds and the media is busying itself by examining MP's expenses.

The pharmaceutical sector still offers an attractive defensive investment sector –  particularly for the income seekers – with the big pharmaceutical companies offering solid and high dividends, which are sustainable, as a result of their strong cash positions and robust cash flows. For investors willing to take a modest risk on the capital gain or loss fronts, the dividend yields on offer are far above the interest rates served up by bank and building society deposit accounts.

GSK's £600m flu boost
GSK is poised to receive over £600m having taken orders for 128 million doses of swine flu vaccine. In future years there should be further orders. Orders have been received from governments across Europe including 60 million from the UK and 50 million from France. The number of cases of swine flu globally has topped 7,500. Pharmacy companies in the flu vaccine business are still waiting for the World Health Organisation (WHO) to issue a recommendation as to whether drug companies should mass produce a vaccine.

GSK already makes one of the key antiviral treatments, Relenza, and reckons it will produce the vaccine, once a seed virus is made available by the WHO. After being given the go ahead from the drug regulatory authorities, we should see the first doses being dispensed in four to six months. GSK will be looking over its shoulder for competition to Relenza but most generics companies cannot match GSK's ability to manufacture on the required scale. GSK is to continue producing vaccines for seasonal flu and will also convert its intended donation to the WHO for developing countries from 50 million bird flu vaccines to the new swine flu vaccine.

Shire shares jump
Shire saw its share price jump as broker Collins Stewart pointed out that "uncertainty over the positioning of Shire's attention deficit hyperactivity disorder (ADHD) portfolio from genericised Adderall XR to Vyvanse has created an excellent buying opportunity." The firm added that, if Vyvanse delivers, Shire could become a takeover target for GlaxoSmithKline.

BP drugs could reduce dementia risk
Drugs which decrease blood pressure could also reduce the risk of dementia. New research reveals that men and women on blood pressure medication are less likely to develop Alzheimer's than people of the same age who are healthy and do not take the drugs. High blood pressure has been linked as a risk in developing Alzheimer's disease and the latest research suggests the drugs have a linked protective effect over and above keeping blood pressure down. In the latest post mortem study, US researchers found substantially fewer symptoms of Alzheimer's in the brains of those who had been prescribed the medication. More research is needed to find out whether the drugs could reverse, or prevent, dementia symptoms.

The Author
Malcolm Craig is a freelance financial journalist

19th May 2009

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