Pharmceutical companies show positive results

Many brokers are drawing the conclusion that whatever is happening in the world, people need drugs in the same way that they need food.

Safe haven

This is borne out by the insatiable public appetite for new "wonder drugs".

As soon as a new treatment is developed that promises to improve our lives, people want and expect to have it.

Witness the wrangle between NHS patients and health authorities over the provision of the anti impotence drug Viagra.

Also, an astonishing one in twelve of the US population now takes the powerful anti-depressant Prozac.

A drug so popular it has entered the language as a byword for mental health treatment.

It's not surprising then, that patents to manufacture these drugs are so jealously guarded.

30% was wiped off the share value of Prozac's manufacturer, Eli Lilley, after a court ruling in August opened the way for other manufacturers to start making copies of the drug.

Patent expiry is fast becoming the biggest headache for top firms.

When the market is jittery, as it has been of late, we need a safe haven.

Morton Herholdt, investment analyst , Barclays Stockbrokers

Added to the success of the pharmaceuticals is the wave of mergers which has boosted share prices.

Merger wave

AstraZeneca itself was formed by a merger between Britain's Zeneca group, formerly a part of ICI, and Sweden's Astra.

Pfizer, the company behind Viagra, took over its rival Warner-Lambert for around $85bn earlier this year.

Both of these deals have been dwarfed by the potential tie up between Glaxo Wellcome and SmithKline Beecham.

The �140bn Anglo-American deal would make the firm the biggest drugs company in the world.

And it has become so market sensitive it is currently subject to an investigation by the US Federal Trade Commission.

Shares in these firms inevitably look a safe bet as consolidation leads to economies of scale.

Also, research and marketing costs, usually the biggest overhead for pharmaceuticals, have fallen.

" When the market is jittery, as it has been of late, we need a safe haven," adds Morton Harholdt simply.

"If there is a pick up in the dot.coms later in the year that could conceivably mean some weakness but not now, it's a growth story."