Executive Summary

BURROUGHS-WELLCOME's SUDAFED/ACTIFED SALES IN U.S. TOPPED $120 MIL. in 1985, according to product information included in a registration statement for Wellcome's initial stock plan. "In the U.S., Actifed and Sudafed are the market leaders in the OTC antihistamine/decongestant category," the prospectus notes. "This market is highly competitive but, as a result of an aggressive marketing campaign, Wellcome has achieved growth in dollar terms in combined sales of these two products of 74% over the past two years and in 1985 the U.S. market accounted for approximately 70% of the group's sales in this product area." The British firm reported that combined sales of Actifed and Sudafed in 1985 were (BRITISH POUND)142 mil. worldwide, up 38% from (BRITISH POUND)103 mil. in 1984. At 70% of worldwide sales, U.S. Actifed and Sudafed revenues would total approximately (BRITISH POUND)100 mil., or $122.5 mil., based on the exchange rate for 1985 used in the prospectus. Wellcome said that further growth of its U.S. OTC cough/cold business "is expected, but at a slower rate." In the U.K., Wellcome noted the company has only two drug preparations in the cough/cold area that can be prescribed on the Natl. Health Service: Sudafed elixir and tablets. The prospectus explains that this situation is the result of restrictions imposed by the British government last April on the number of drugs in certain therapeutic categories that can be prescribed by doctors for Natl. Health Service patients. "These restrictions have resulted in the loss of sales of certain Wellcome products, most notably Actifed, which have ceased to be prescribable on the NHS but this has been partly offset by the beneficial effect on sales of Sudafed elixir and tablets," the company said. "Promotional restrictions applicable to prescribable products no longer apply to Actified," the firm added, "and Wellcome is now undertaking a campaign on television and by other means along the lines of its successful U.S. marketing efforts to promote sales in the U.K. through the OTC market." Wellcome's Actifed/Sudafed sales represented approximately 17% of the firm's total health care revenues of (BRITISH POUND)825 mil. in 1985, or approximately $1.01 bil. In pounds sterling, sales from Wellcome's human health care products segment were up 21% in 1985, boosting trading profit from the segment 41% to (BRITISH POUND)138 mil. Overall, Wellcome reported sales over (BRITISH POUND)1 bil. in 1985, up 25%, with net profit increasing 45.2% to (BRITISH POUND)68.7 mil. Based on average currency exchange values for 1985 cited in the prospectus, Wellcome sales and net income translate into $1.23 bil. and $84.2 mil., respectively. Wellcome's initial public offering consists of 210.8 mil. shares at a U.K. offer price of 120p per share. The offer includes 168 mil. shares offered by the Wellcome Trust and another 42.8 mil. shares offered by the company. Wellcome PLC is offering its shares to eligible employees and retired employees at 25p each. At the 120p U.K. offer price, the shares arre worth approximately $1.69 each, or a total of $72.3 mil. for the company's 42.8 mil. shares.