Zeneca can afford . . .
IN IMPERIAL Chemical Industries' Mill- bank palazzo, I once asked Albert Edward Frost, who was finance director, why he was raising money. He brushed the question aside: 'Money', he said, 'is a raw material of the chemical industry.' So it is. In the pro- cess of splitting in two, the group won itself another £1,300 million to endow Zeneca, the new name (if you like new names) for ICI Pharmaceuticals. It took some hard riding, though. Since this idea occurred to John Mayo — then with ICI's advisers, S.G.Warburg, but now Zeneca's finance director — pharmaceutical shares have tumbled out of fashion. The two worst per- forming big companies on the London stock market this year have been Glaxo and Wellcome. Sterling's exit from the Euro- pean exchange rate mechanism has, Peter Warburton says, highlighted the attractive- ness of industrial chemicals (`new ICI') as against pharmaceuticals. The case for the split must depend, as it always has, not on stock-market opportunism but on commer- cial sense. Sir Denys Henderson, who is chairman of ICI and now of Zeneca too, argues eloquently for it. Chemical compa- nies, he says, can no longer get their raw material for the asking — not even German companies backed by German banks. They must earn it, and to do that they must spe- cialise: 'We cannot all fight on every front.' Size alone will not save them, any more than it has saved IBM or General Motors.
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