Nycomed Amersham Imaging

Nycomed Amersham Imaging is a world leader in the provision of pharmaceutical products injected into the body to provide diagnostic information, particularly of soft tissue and organs. We continue to build upon our leading franchise in both of the commercial streams that form our core global business – medical diagnostics and therapy products. Our products are particularly focused on three areas of growing clinical need – cardiology, neurology and oncology – to enable an earlier and more accurate diagnosis and treatment of disease.

As healthcare providers face the spiralling costs of managing these diseases, we anticipate that demand for our existing products and those new molecular diagnostics in our R&D pipeline will increase. Turnover in 2000 increased by nine per cent, on a comparable basis, to £774 million. We achieved excellent growth in our portfolio of patented medical diagnostic products, up 19 per cent to £225 million, and our group of unpatented products increased three per cent to £300 million. We added four new products to our portfolio, DaTSCAN, NeoSpect™, Optison™ and TheraSeed™.

Our strength in medical diagnostics enabled us to consolidate our leadership position and achieve sales of £266 million for our X-ray products, up five per cent, and to grow our market share to achieve sales of £67 million for our magnetic resonance imaging (MRI) products, an increase of 14 per cent. Strong sales of Myoview™, our radiopharmaceutical for diagnosing heart disease, in the US and Japan, combined with sales of core radiopharmaceutical products, led to 13 per cent growth in radiopharmaceutical diagnostics, with sales of £287 million, including our share of the sales of Nihon Medi-Physics (NMP), our joint venture in Japan with Sumitomo Chemical Co Ltd in diagnostic radiopharmaceuticals.

Trading profit before exceptional items and goodwill amortisation increased 10 per cent to £269 million. R&D investment was flat at £74 million, giving an overall operating profit, before exceptional items and goodwill amortisation, of £195 million, up 14 per cent.

Margins were strong throughout as the benefits of investments in rationalising the global manufacturing operations continues. In October, we successfully completed a major capital project in Shanghai, China, with regulatory approval for local manufacture and sale of Omnipaque™ and Omniscan™. In Lindesnes, Norway and in Cork, Ireland, two major projects totalling £35 million to increase manufacturing capacity for medical diagnostic products are close to completion. We expect to start regulatory filings before the end of 2001, further improving our cost structure.

We are currently in the process of rationalising our radiopharmaceutical production capacity and an exceptional charge of £11 million was made with expected annual cost savings of £3 million from 2002.

We continued to record strong growth in the US for all of our medical diagnostic products, with turnover of £355 million, up 15 per cent on a comparable basis. We increased our market share for all products and compliance by hospitals affiliated to the Novation purchasing alliance continued to grow. Excellent volume growth enabled sales of X-ray diagnostic products to increase to £167 million, up 11 per cent, continuing the trend of recent years. Myoview achieved growth of 37 per cent to £67 million, driven also by the Novation purchasing alliance. Our life cycle management of Omniscan, providing new clinical uses for this non-ionic MRI diagnostic product, assisted growth to £45 million, up 18 per cent.

In Europe, sales decreased to £162 million, four per cent below last year due to market changes ahead of German healthcare reforms and a reduction in bulk sales. In Japan, our sales grew by 18 per cent to £168 million. This included sales of bulk substance to Daiichi Pharmaceutical Co Ltd, our licensee in diagnostic contrast products, and 50 per cent of sales by NMP.

The Chief Executive's business review continues on the next page >>
(page 2 of 7)