Market Report: Profit warning hampers pharmaceutical sector

A profit warning from BTG was to blame for an off-colour pharmaceutical sector. The FTSE 250 company said half-year revenues would be at the bottom end of its £410m to £440m guidance after sales of its varicose vein treatment Varithena stuttered, causing it to slump 62p to 601p.

“Physician interest in Varithena… remains strong and insurance coverage is expanding, but this has not yet translated into sales growth,” the company said.

That outlook dragged down BTG’s peers, especially in the US, where it is rolling out Varithena.

Hikma Pharmaceuticals was the biggest blue-chip faller, 105p worse off at 2,260p. Shire, which is still working on snapping up America’s Baxalta, dropped 119p to 4,485p. Meanwhile GlaxoSmithKline slipped 6p to 1,306.5p and AstraZeneca fell 46.5p to 4,201p.

The healthcare sector is now more valuable to the FTSE 100 than mining, amid tumbling commodity prices and a rising appetite for pharma shares thanks to a surge in deal-making.

The sector’s woes came on a day when the FTSE 100 rose 27.24 points to 6,326.16 as a hike in US interest rates looks increasingly unlikely this year.

Brent crude futures jumped almost 5 per cent to $51.52 a barrel after oil executives predicted that US production will soon start to fall. That helped Shell gush 60.5p higher to 1,766.5p, while BP improved by 10.1p to 378.1p.

Investors stocked up on supermarket shares ahead of Tesco’s keenly awaited results. Sainsbury’s star turn last week hoisted the sector higher and its rise continued as Morrisons climbed 5.4p to 173.6p, Tesco advanced 5.6p to 192.15p and Sainsbury’s gained 5.8p to 272.4p.

Lower than expected third-quarter production meant Acacia Mining, formerly African Barrick Gold, plunged 41.1p to 219.2p. It warned of lower full-year production as a result and higher cash costs.

Elsewhere, there was a fleeting high for the beleaguered small-cap oil sector as AIM tiddler Nostra Terra Oil & Gas, which jetted 0.03p to 0.12p, teamed up with Independent Resources, 0.08p richer at 0.83p, to buy a 50 per cent stake in an Egyptian oilfield for £3.5m.