Goldman Sachs' decision to move the group from its prestigious recommended list to a neutral stance of market performer sent the stock tumbling by 139 pence at one point, and added to gloom on the FTSE 100, where each 10 pence fall in Glaxo accounts for around two points off the index.

Glaxo was trading down 5.9 per cent or 106 pence at 1210 GMT, compared with a fall of 2.7 per cent in the FTSE 100 as a whole and declines of 2.9 per cent for British rivals SmithKline Beecham Plc and 3.5 per cent for Zeneca Group Plc.

Glaxo has made regular appearances in and out of Goldman's recommended list, which depends on the expectation of a 20-per cent upside in the share price.

The investment bank's analysts said that they were lowering their 12-month price target for the stock to 18 pounds per share from 20 pounds. They said the downgradereflected lower expectations for sales of a swathe of new drugs which the group is launching over the next 18 months, including Amerge for migraine, Ziagen for AIDS and Zeffix for hepatitis B.

They also expressed concern about the spreading economic crisis in Asia and South America, which have both been targeted as key growth regions by Glaxo Wellcome.

The group opened a $200-million plant in Brazil this week, and has taken the unprecedented step for a western drug company of applying for approval of Zeffix in China at the same time as in western markets.

Other analysts said that the drop in Glaxo's price had to be put into the context of a sustained rise over the past 18 months as the market began to buy management's assurances that it would prosper despite this year's US patent expiries on its two former top-selling drugs, Zantac and Zovirax.

Even after Friday's bruising falls, the stock is 89 per cent above its January 1997 lows, compared with a 72-per cent gain for SmithKline and 32 per cent risefor Zeneca. The group's shares have continued to outperfrom the two other UK groups in recent months despite Glaxo's 21 per cent drop in first-half profits as the market focused on management's promises of a significant recovery in sales and profits next year and beyond.

Credit Lyonnais Securities analyst Steve Abbott said the current levels represented "a good buying opportunity", and noted buyers were already returning to the stock."I suspect it will bounce back," said Abbott.