In anti-cancer, too, Zeneca has a portfolio of new and established products that will help it reach its ambition of being number one in the market. Consensus forecasts suggest a 17 per cent compound annual growth rate to the year 2000.All this potential makes Zeneca an attractive proposition But it does not come cheap. With pounds 2bn of net assets and a market capitalisation currently standing at pounds 16bn, a bidder is already looking at goodwill of pounds 14bn to deal with. The key aspiration is to deliver annual growth in profits of 15 per cent a year over the next five years That is not unrealistic.

The company has strength in depth that makes the proposition viable.Pharmaceuticals margins are running at around 30 per cent; the agrochemicals margin target has been increased significantly to the 12-18 per cent range; while specialities is lagging towards the bottom of its 8-14 per cent range.Superimpose on that the sales growth potential of new products such as the Accolate asthma treatment and Amistar, the fungicide using novel chemistry, which threatens to be a agrochemicals blockbuster and goes on sale next year, and it is easy to see how 15 per cent growth is within reach. It has consistently demonstrated its ability to live up to its potential and its commitment to R&D means value for the future is being accumulated.Given its record, Zeneca’s aspirations deserve to be seen as very achievable targets. Indeed it is undervalued.The stock market has a more sophisticated valuation mentality and might object to the crudity of the analysis but not to the ultimate conclusion. Zeneca has a drugs pipeline that is the envy of the industry.

They closed on Friday at pounds 17.39, which is a few coppers below the all-time high. On this basis, there is no suggestion that this is a share price propped up by bid speculation. Assuming a simple relationship between share price and profit, the shares should today be trading at around pounds 20. Since then, profits have, in effect increased by around 2.5 times. The real worth of the shares was therefore around pounds 8 at demerger.