Galen shares fall after critical UK report on HRT

Shares in Galen Pharmaceuticals fell sharply yesterday in the wake of the latest report on potentially lethal side effects of hormone replacement therapy (HRT) treatments.

The company's stock traded down as much as 8 per cent before recovering some ground to end the session 5.32 per cent weaker in London. More than 5.5 million shares changed hands, five times the usual volume.

It is the third time that Galen shares have been hit by the publication of negative reports on HRT treatments, despite its protestations that its products are, in general, not the same as those at the centre of the studies.

HRT products account for 12 per cent of the Northern Irish company's sales.

The study of more than one million women over 10 years, published in British medical journal the Lancet on Thursday, showed that women using combined oestrogen/progestagen HRT were twice as likely to develop breast cancer as those not using any HRT treatment.

Patients using oestrogen-only treatments were 30 per cent more likely to develop the disease than those on no HRT.

A spokeswoman for Galen last night said the results reiterated the findings of two US studies last year. It said that, of the four HRT treatments it produces, only one is a combined product. The rest are oestrogen-only treatments.

She also pointed to the letter released yesterday by the British Committee for the Safety of Medicines which says that the benefits of short-term therapy outweighed the risks involved.

Analysts acknowledged that Galen had consistently adopted a policy of short-term, low-dose application of HRT in accordance with guidelines from the Committee on Safety of Medicines and US regulator the Food and Drug Administration.

Merrion Stockbroker analyst Mr Peter Frawley said the latest report was unlikely to have a severe impact on the operational side of the company.

"The risks outlined in this report have been well documented before," he said. "In addition, this is a European-based study, which is likely to have little impact in the United States where Galen sells the majority of its products."

He said a further factor supporting the company's revenues was the lack of an alternative to HRT for women in menopause.

The Galen spokeswoman added that Galen's HRT sales had not suffered in the United States despite the publication of two high-profile and adverse reports there last year.

Analysts agreed that the biggest threat to Galen was the impact the latest report could have on investor sentiment, already buffeted by the breakdown of takeover talks with Barr Laboratories and worries about the threat from generic rivals to some of its products.

Davy analyst Mr Jack Gorman said that, with 12 per cent of sales dependent on HRT, the continued stream of negative news was not welcome.

However, he said the downside for the company's shares was likely to be limited by the fact that there was little in the study that was not already known.