Market Report: Drug stocks take a turn for the worse

DRUG shares were wheeled back into the sick bay yesterday as worries multiplied about the Clinton administration's healthcare plans and Wellcome encountered renewed criticism at an Aids conference in Berlin.

The already badly underperforming sector suffered further falls with Wellcome leading the retreat, down 25p at 728p.

The stock market frets that the industry will be forced into a summer of discontent and uncertainty as the US authorities are forced to hold back what could be extremely controversial healthcare changes.

The Clinton assault on drug profits was at one time expected to be unveiled last month. But a series of delays has left the impression that any curbs may not be known until August, possibly September.

The uncertainty is threatening to play havoc with investment confidence as the debate over the possible Clinton moves rages.

Wellcome was expected to come under attack at the Berlin conference. And Maxime Seligman, who has led an Anglo-French study into Aids treatment, duly obliged. He said Wellcome's Retrovir drug had 'no significant benefit in terms of survival or progression to Aids'.

Although the Seligman view was already known - it was published in the Lancet in April - its high-profile reappearance was enough to ruffle a market already unsettled by criticism of Retrovir as well as the Clinton indecisiveness.

Glaxo Holdings fell 8p to 583p and SmithKline Beecham 14p to 435p.

Fisons, with the added discomfort of almost certain removal from the FT-SE 100 index, lost 8p to 149p.

The sector sickness must be creating considerable unease in the Zeneca camp. The shares of the former Imperial Chemical Industries drugs division fell a further 5.5p to 612p, perilously close to the 600p rights price. The nil-paid lost 5p to 14.5p.

The prospects for the pounds 1.3bn cash call are further impaired by US-inspired restrictions preventing Zeneca's underwriters supporting the shares in the crucial five days before the issue closes.

Boots, in a firm stores sector, rose 5p to 445p. It is thought to have obtained restricted approval from the US Food and Drug Administration for its Manoplax heart drug.

The rest of the market failed to hold on to early gains with the FT-SE 100 index ending down 0.4 points at 2,844.4. But the persistent demand for non- Footsie stocks was again underlined as the FT-SE 250 index stretched to a new high, up 13.2 to 3,198.1.

British Aerospace's revival continued with an SG Warburg buy recommendation providing further fuel. The shares jumped 22p to 409p.

But BAA, the airports group, fell 17p to 753p as Robert Fleming Securities drew attention to the possibility of a rights issue to fund overseas expansion.

Properties continued to soak up cash calls - Great Portland Estates, raising pounds 95m, rose 8p to 197p but Southend Properties fell 12p to 70p after a pounds 24.35m convertible loan stock was announced, together with a forecast of lower dividends.

Thorn EMI, following an analysts' meeting, fell 5p to 863p and Yorkshire Chemical lost 13p to 377p as Warburg cut its profit forecast from pounds 13.5m to pounds 12m.

English China Clays, removed from Footsie last week to accommodate Zeneca, rose 16p to 435p as Carr Kitcat & Aitken chased stock. An investment presentation was held at Warburg after the market closed.

MB Caradon, the building products and security printing group, fell 6p to 293p. A US rival to its security business has announced reorganisation plans that could, it was felt, hamper MB's operations.

MFI, the flat-pack furniture group, shaded 2p to 134p. It is selling its shares in Carpetright, the carpet retailer on its way to market. The disposal will produce a profit of more than pounds 20m. The cash will be used in the group's French build-up.

Sims Food slumped 53p to 129p on its profit warning.

Engineer James Wilkes rose another 5p to 93p, a two-day gain of 13p. Suter, the mini- conglomerate, has 16 per cent and is rumoured to be keen to buy more. Suter shaded 1p to 150p. The chemical group Sutcliffe Speakman rose 2p to 13.5p on talk of a revamping exercise.

Barr & Wallace Arnold, the coach and hotel group, was again in demand. The voting shares soared 43p to 538p and the non-voters 12p to 231p.

The FT-SE 100 index, at one time up 0.1 points, ended 0.4 lower at 2,844.4. million shares with 26,619 bargains completed. The account ends on 18 June with settlement on 28 June.

Housebuilder Wilson Bowden held at 451p as two large lines of shares were traded. David Wilson, chairman, sold 2.7 million at 438p, cutting his interest to 51.57 per cent. And the company's executive pension scheme sold 1,250,000 shares, producing a net pounds 3.2m for WB. Mr Wilson is the only member of the scheme who is currently an executive.

Shares of the publisher Harrington Kilbride rose 9p to 214p as Professor Sir Roland Smith became non-executive chairman. In effect he replaces the late Ted Croker, former head of the Football Association. HK made profits of pounds 1.86m last year. Stockbroker Beeson Gregory is looking for pounds 2.2m this year and rates the shares a buy.