By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Shares of drug giant AstraZeneca PLC
dropped sharply Friday after a further delay in the potential
approval of the firm's Brilinta heart drug, as the U.K.'s benchmark
index edged lower.
The FTSE 100 fell 0.3% to 5,860.89, as banking stocks also lost
ground, though gains for some oil and telecom stocks helped limit
losses for the index.
Shares in AstraZeneca (AZN) slumped 5.4% after the U.S. Food and
Drug Administration asked for additional analysis of data from a
study of Brilinta.
Analysts said the demand for extra analysis is likely to delay
final approval of the drug by six to twelve months.
That's a particular worry for AstraZeneca because patent
expiration will expose several of its drugs to generic competition
in the coming years and U.S. Brilinta sales are one of only a few
potential sources the company has to replace lost revenue, said
analysts at Jefferies International.
"This delay will come as a disappointment to many and may also
start to raise uncertainties about the potential scale of the
product's likely commercial success," the broker said in a note to
clients.
Jonathan Jackson, head of equities at Killik & Co., said the
patents expiring over the next six years account for more than half
of the company's sales.
"Although the company remains confident in the outlook for
Brilinta, at best the launch will be delayed by up to a year. At
worst, it will be rejected. Either way, the chances of approval in
the U.S. have probably reduced and the prospect of more onerous
labelling may hamper its sales potential," Jackson said.
Bank stocks also weighed on the main U.K. index Friday as
European leaders continued to meet in Brussels to discuss the
sovereign-debt crisis.
Shares in Barclays PLC (BCS) fell 1.3% and Lloyds Banking Group
(LYG) dropped 2%.
Bank stocks were also weaker across the rest of Europe, dragging
most of the continent's major indexes lower.
Mobile network operator Vodafone Group PLC was a strong
performer. Shares in the group rose 1% after Nomura named the stock
as its top pick among large-cap telecommunications companies, due
to its cash flow and potential dividend upside.
Software firm Autonomy Corp. rose 2.5% as technology stocks got
a lift across Europe from Oracle Corp.'s (ORCL) strong earnings and
following a report on Thursday that Oracle or Microsoft Corp.
(MSFT) could make a bid for the company.
Most oil and gas stocks advanced, with BG Group and Royal Dutch
Shell (RDSA) both rising 0.5%.
Outside the main FTSE 100 index, shares in Punch Taverns PLC
jumped 8.9% after the company said its improved trading momentum
has continued in recent weeks, despite the impact of severe
weather.