That is good value.UniChem’s second half stagnantUniChem is now in third place among UK chemists chains since Gehe pipped it in January in the year-long marathon bid battle for Lloyds Chemists. But despite having to write off a chunky pounds 13.2m for the cost of the battle, it was probably wise to walk away from Lloyds, where the Germans are going to have to work hard to justify their pounds 684m bid.That said, UniChem will need to be equally energetic in convincing the City it has an exciting replacement strategy up its sleeve. Excluding the bid costs, pre-tax profits rose an unexceptional 8.3 per cent to pounds 53.5m in the year to December, bang in line with the forecast made two months ago, while “clean” earnings, up 6.3 per cent to 20.2p, seem to have stagnated in the second half.The core drugs wholesaling operation seems to have been particularly badly affected. Underlying the 5 per cent profits growth to pounds 40.9m was a flat 3.1 per cent operating margin, the first time anyone can remember returns not growing.High-margin toiletry sales continue to be creamed off by the supermarkets, leaving the running to be taken up by low value-added hospital supplies. But last year’s sub-market growth of 7 per cent in medicines, the mainstay of the business, has accelerated to 10 per cent in the first two months of 1997. UniChem is suggesting it is ready to expand the wholesaling business into Europe.Even so, the Moss Chemists chain looks more exciting, turning in half the growth in group operating profits last year. The target is to spend up to pounds 50m raising the current chain of 459 by around 100 this year – still less than half the size of Gehe in the UK.

Beyond that, the survival of the health bill means UniChem can push ahead with plans to link up with doctors’ surgeries.The group is, naturally, unworried by the Gehe threat and Collins Stewart is looking for profits of pounds 61m this year, putting the shares, up 12.5p at 260.5p, on a lowly forward multiple of 12 Unexciting even so.. Shares in Xenova, the biotechnology group which floated at 215p in December, soared 80p to 435p yesterday after it announced a licensing deal with Zeneca for its library of naturally occurring compounds. The news comes less than two months after Xenova clinched a similar research collaboration with Bristol-Myers Squibb, the big US pharmaceuticals group. The biotech company refused to reveal the financial details of the link- up with Zeneca, which paid pounds 2m for a 4 per cent stake at the time of the float, but Louis Nisbet, chief executive, said it was part of Xenova’s “enormous progress” over the past year.
He said the company’s QTC libraries, which are derived from plant, fungal and microbial sources, “provide the fastest way of unlocking pharmaceutical products of interest from natural products chemistry”. Because of the way they are formatted, these libraries can be shipped to pharmaceuticals companies which can use them to test potential drug targets.Zeneca will pay an initial licence fee to use the libraries, then milestone fees for every lead it takes up and royalties on any drugs which result from the collaboration. The latest biotech tie-up is the third for Zeneca since last June, following so-called database subscription agreements with Incyte Pharmaceuticals of California and Pharmacopeia of New Jersey.The news came as Xenova announced a small cut in losses from pounds 7.99m to pounds 7.77m for the year to December, on revenues cut from pounds 1.79m to pounds 1.59m.

It started the year with pounds 27.8m net cash, including pounds 21.3m from the placing and is set to pick up pounds 2m under a deal with Warner Lambert shortly.Separately, Cambridge Antibody Technology announced that its flotation later this month would be priced at 500p, capitalising the group at pounds 109m. The biotechnology company is raising pounds 38m, after expenses, from the placing, with first dealings expected to begin on Tuesday. David Chiswell, chief executive, said the company would use the money to develop CAT’s portfolio of antibody-based human therapeutic products.Also yesterday, Cantab Pharmaceuticals announced its anti-herpes vaccine had been well tolerated in early stage trials. The drug, which formed the centrepiece of a licensing deal with Glaxo Wellcome on Tuesday, was being tested in 24 carriers of the disease in the UK.. Telecoms dominated the stock market.

Nearly every broker in sight seemed determined to dial into BT, and rival Cable and Wireless was engulfed by speculation it planned a major US acquisition. BT was the heaviest traded share and best performing blue chip, hitting a 12 month high with a 19.5p gain to 461.5p. The market has been impressed by a string of investment presentations, mainly relating to the proposed $20bn takeover of MCI, the US communications group.
The BT share advance has been scored despite Labour threats of a windfall tax and the giant’s seemingly endless battles with its industry regulator.At 461.5p the shares are still below the 486p peak, hit at Christmas four years ago.The MCI deal, which still has regulatory hurdles to overcome, is part of BT’s push for a world-wide role. There is talk that it is planning an alliance with Telefonica, the Spanish group, and yesterday it announce a Japanese joint venture and its involvement in a bid for a Singapore licence.Cable, up 3p at 509p, is said to have its sights on Sprint, the US group. It was reported to be negotiating with two Sprint shareholders, France Telecom and Deutsche Telecom.The French denied any talks with Cable, and Sprint claimed a deal with the UK group was not possible under standstill agreements it had with its Continental shareholders. Cable would probably require a rights issue to fund the deal.It is still negotiating with the Chinese over its control of Hongkong Telecom. The group is expected to cut its HKT stake to nearer 35 per cent in exchange for a prominent role in the development of China’s telephone industry.The rest of the market remained subdued by the election.

Footsie ended 24.6 points lower, unable to draw any support from a New York undermined by interest rate worries.The planned windfall tax continued to weigh on privatised groups with the generators suffering the added discomfort of Westminster calls to give up more generating capacity.Beer and leisure shares felt the pressure of Labour’s proposals for a minimum wage while Bass, off 19.5p to 820.5p, also had to contend with the possibility that the Whitehall probe into its Carlsberg Tetley takeover will be delayed until after the election. First Leisure fell 16.5p to 345.5p.Associated British Foods, the bread and sugar group, surrendered 5p to 511.5p on persistent talk that it intends to sell part or all of its Irish retailing operations to Tesco, little changed at 334p.The food producer owns Ireland’s largest supermarket operation and also has clothing shops in Eire.Carpetright had a threadbare session, at one time down 31.5p on worries of a profits warning. But a denial from finance director Ian Sneyd trimmed the fall to 16.5p at 562.5p. Meeting institutions at Kleinwort Benson, he said the market’s pounds 33m to pounds 35.5m range was “acceptable” but added analysts at the top should be “more concerned” than those at the bottom.The twitchiness over Carpetright followed the Limelight fiasco – down another 10p to 97.5p – and the MFI warning.Cairn Energy’s figures and link with Shell provided a 56p boost to 634.5p; Enterprise Oil was back in the frontline with a 16.5p jump to 663p.Kingfisher bounded 22.5p to 697p on its results but a downbeat Vickers performance left the shares 22p lower at 239p.Financials had a subdued session. Mercury Asset Management, where suggestions of a Salomon Brothers strike linger, lost 31p to 1,334p and Perpetual was lowered 30p to 2,705p.Abbey National dropped 17p to 732.5p as Kleinwort and Teather & Greenwood made negative noises.Stanford Rook, developing a tuberculosis treatment, was the drug casualty. The World Heath Organisation’s TB breakthrough sent the shares crashing 120p but at the close they were down 40p at 515p. Xenova, on its trading link with Zeneca, jumped 80p to 435p; the shares came to market at 215p in December.Stagecoach was again shunted lower, retreating another 34.5p to 689p on its trains embarrassment.Parity, the computer group, shaded 6.5p to 533.5p as HSBC’s investment bank sold one million shares It found a rich profit irresistible.