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, while worries about
losses in Ireland also weighed on the banking sector, pulling the
U.K.'s benchmark index down.
The FTSE 100 fell 0.3% to 5,873.96, as gains for mining
companies as well as 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 Lloyds Banking Group (LYG) dropped 3.5% after it
warned that it had seen "a further significant deterioration" in
its Irish business.
The bank said around another 10% of its 26.7 billion pound Irish
portfolio likely became impaired over the second half of the year
and that the total impairment charge for the year related to
Ireland will be around £4.3 billion.
Shares in Royal Bank of Scotland Group (RBS), which has an even
bigger exposure to Ireland that Lloyds does, fell 4.9%.
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 1.3% 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 4.2% 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.
Mining stocks also reversed earlier losses to trade higher as
commodity prices edged up. Vedanta Resources PLC rose 2% and Lonmin
PLC rose 1.3%.
Most oil and gas stocks advanced, with BG Group rising 0.9% and
Royal Dutch Shell (RDSA) up 0.6%.
Outside the main FTSE 100 index, shares in Punch Taverns PLC
jumped 14% after the company said its improved trading momentum has
continued in recent weeks, despite the impact of severe
weather.