GlaxoSmithKline is in demand as fears of increased competition for its bestselling asthma drug Advair faded following comments from Israeli group Teva.
Teva, the leading generic drugs manufacturer, said it was unlikely to launch a subsitutable generic version of Advair "at this time", and the news has sent Glaxo shares 28.5p higher to £12.56. Kevin Wilson at Citigroup said:
The world's top generic company has now admitted that there will be no rapid erosion of Advair by generics, which should assuage the fears of even the most sceptical fund manager.
Meanwhile the FTSE 100 is still down slightly ahead of the US non-farm payroll numbers, off 6.35 points to 5856.44. With the Federal Reserve's decision on quantitative easing out of the way, investors are showing some concern again about European sovereign debt, with Ireland and Spain in the firing line. There are uncertainties about whether Ireland can restore its economy with its proposed €6bn of cuts, with Allied Irish Bank falling nearly 10% and Bank of Ireland off a similar amount. Chris Iggo at Axa Investment Managers said:
Ireland has been in the spotlight recently with concerns about the fragility of the political consensus behind additional budget cuts. Irish yields have moved 170 basis points in the last two to three weeks and investors remain unconvinced about the ability of Ireland to both pursue aggressive cuts in its budget deficit and simultaneously provide ongoing support to the worst affected parts of the Irish banking system.
Ireland remains a Aa2/AA- rating but there is clearly a risk that it will be downgraded again in the near term. Peripheral spreads in general have widened again and it looks as though there will need to be some reassurance from the EU authorities about the robustness of the support mechanism. Expect this part of the market to be very volatile going forward with a risk that wider spreads in peripheral sovereign debt markets could spill over into a more systemic bout of risk aversion in the run up to the end of the year.
