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City File: Zantac

Sunday 03 January 1993 00:02 GMT
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PRODUCING a blockbuster drug takes a lot of know-how, a good deal of luck and a good sales force. Since that combination is hard to come by more than once in a while, pharmaceutical companies are unable to regularly churn out best-sellers. Look at Glaxo. It has spent hundreds of millions of pounds searching for a successor to Zantac, which it hopes will be a similar tonic to profits.

But so far it has not found one, which has caused many supporters to shake their heads pessimistically. But at the same time, Glaxo is gradually building up a healthy stable of second-line drugs which, added together, are not a bad substitute for the real thing.

Last week, the US authorities approved its latest migraine treatment, Sumatriptan. The shares immediately rose 27p to 774p. The drug is better than its rivals and therefore highly priced. It is one of a new generation of Glaxo drugs, four of which could account for a quarter of worldwide sales within five years.

In the long run, a pharmaceutical company reliant on a portfolio of drugs must be a more attractive investment than one searching for an elusive world-beater.

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