Celltech in DIY insurance move

RISING premiums have led Celltech, Britain's biggest biotech group, to set up its own insurance company. Although the group has a three-year policy ending in 2003, it is going it alone on insurance for product liability. Premiums cost Celltech an extra £1.2m in the first six months of this year.

Providing its own insurance will cost Celltech £1.5m this year and £3m a year in future. The company said the move would clip 1p from City forecasts of 16p a share for full-year earnings.

Without the benefit of a milestone payment of £25m from its partner Pharmacia in developing a treatment for Crohn's disease, pre-tax profits in the period ending last June fell to £11.9m against £27.4m a year ago.

The second half will include a further £10m from Pharmacia, coinciding with the group initiating Phase III patient tests for its treatment for rheumatoid arthritis. The drug could be a big money-spinner in a market estimated to be worth £2bn.

With cash of £98.8m, chief executive Peter Fellner said the group was concentrating on research and development, where spending rose by 8% to £45m. This spend is backed by £80m of undrawn borrowing facilities and a healthy rise in product sales to £117m. Royalty payments grew 41% to £39m.

The second half is always better for Celltech, thanks to its range of cough and cold treatments. Sales of its once-a-day treatment for attention deficit hyperactivity in children now command 11% of the prescription market worth £11.4m.