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BEECHAM LEADS FOREIGN CONTINGENT IN OCTOBER MARKET; COMPOSITE IS FLAT

Executive Summary

Beecham's stock price marched in step with the S&P 400 average during October, with an advance in the 3-4% range. Beecham stock closed the month at 16-3/8, up 5/8 of a point, exactly where it was at the beginning of 1988. The company's consistent market valuation, which has slipped below the $ 6 bil. mark only twice at the end of months this year, has been supported by a solid bottom line and an increased reliance on health care operations compared to consumer products. While prescription and OTC drugs accounted for roughly 45% of corporate volume in fiscal 1988 (year ended March 31), they made up two-thirds of Beecham's operating profit. This percentage could increase as new drugs emerge from the Beecham pipeline. The company has begun to draw more attention from the financial community with its Americanized top management. With the new American top management, the company is courting the U.S. investment community. They are making a presentation in New York late in November. Heavily weighted Beecham is one of four foreign companies tracked by the "F-D-C" Monthly Index of over-the-counter stocks. The other three, Elan (up 5/8 to 9), Teva (up 5/8 to 6-7/8) and Pharmacia (up 1-1/2 to 20-1/8) all posted gains in October. Elan has been awaiting an FDA advisory committee's review of Marion's Cardizem SR, a two-a-day version of diltiazem incorporating Elan's controlled release system. The Irish firm is also about to add $ 10 mil. to its U.S. sales base with the recently announced acquisition of Knight Medical (see related stories, p. 4 and T&G-8). Pharmacia, one of only three Index issues to advance more than a point in October, topped the $ 1 bil. valuation mark for the fourth time in 1988. The Swedish company's drug Dipentum (olsalazine) was recently recommended for approval by an FDA advisory committee for acute treatment of ulcerative colitis. Capsule maker R. P. Scherer (up 2-7/8 to 31-3/8) received another boost in October when company management announced that through investment banker Goldman Sachs it would explore the sale of the company to a third party or a leveraged buyout. Scherer management had originally fought proposals advanced by principal shareholder Karla Scherer Fink to sell the company. R. P. Scherer stock began the year trading at 12-1/2. Of the six wholesaler stocks followed by the Index, three advanced in October, one declined and two remained unchanged. That decline, however, by the group's top-weighted issue, Alco Health Services (down 1-1/2 to 23-1/2), resulted in a fractional decline for the Wholesaler Component. Alco's retreat likely reflects the increased scrutiny by the Federal Trade Commission to the proposed merger with McKesson. Point gains were achieved by two wholesaler stocks, Durr-Fillauer (to 17) and Moore Medical (to 14-3/4). Chart omitted.
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