STOCKS NEWS EUROPE-UK pharmas rise; BarCap starts coverage

Shares in drugmakers AstraZeneca (AZN.L) and GlaxoSmithKline (GSK.L) rise 0.6 and 1.1 percent respectively, as Barclays Capital initiates coverage on the European pharma sector with a "equal weight" rating on the two firms.

BarCap says there are few risks to GlaxoSmithKline defensive business in the near term and uncertainty over the Advair product's upcoming patent expiries, legal challenges and generic competition would come into force at a slow pace.

On AstraZeneca it says there is a strong case in the Crestor U.S. patent trial, with the potential for a positive summary judgement hearing before year-end. However, the broker says looming generic competition to Pfizer's (PFE.N) similar Lipitor in 2011 is likely to see payors switch away from Crestor.

"At current prices we prefer AstraZeneca to GlaxoSmithKline on the basis of valuation although there is only a few percentage points to it. This preference depends on our assumption that FDA approves Bilinta and AZN wins the Crestor U.S. patent case," BarCap analysts say.

GlaxoSmithKline also benefits from a target price hike by UBS to 1,550 pence from 1,450 pence, with a "buy" rating.

Reuters Messaging rm://harpreet.bhal.reuters.com@reuters.net