Glaxo profits fall by 92%

GlaxoSmithKline

The UK's largest drugmaker, GlaxoSmithKline, has seen its Q2 profits fall by a massive 92 percent, due to legal costs over lawsuits regarding their Avandia diabetes medicine and the Paxil antidepressant.

Restructurig costs also reportedly affected the company's bottom line, which saw a pre-tax loss of £97 million, compared with a profit of £2 billion for the same period last year.

In a statement, Chief Executive Andrew Witty said the company's main businesses were performing well in the face of challenges, including generic competition to herpes drug Valtrex in the United States and mounting pressure on drug prices in Europe.

Lawsuit costs

Last week, GlaxoSmithKline said it would record a £1.57 billion charge in the second quarter to settle cases including claims that its Avandia diabetes treatment led to heart attacks. The firm had also seen lawsuits over its antidepressant Paxil, as well as an investigation into working conditions at one of its Puerto Rico factories.

On the plus side, Glaxo's turnover rose by 4 percent to £7 billion after a 13 percent fall in US sales was offset by growth in emerging markets and Japan. It was also helped by £275 million in sales of the H1N1 avian flu vaccine.

Witty said the worst of Glaxo's patent expirations are over, meaning the drugmaker can now turn its focus to expansion in emerging markets and consumer products while spurring innovation in its own labs. Sales climbed 4.1 percent to £7.02 billion. Excluding vaccines and antiviral drugs for pandemic flu, sales declined 2 percent, the company said.

In the US, drug revenue slumped 13 percent to £1.9 billion in the quarter, hurt by sales of generic copies of Glaxo's Valtrex treatment for genital herpes and price pressures resulting from the overhaul of the US health-care system. Avandia sales sank 26 percent to £152 million.

Relevant articles:

Avandia GlaxoSmithKline face £1.5bn legal bill | Sanofi-Aventis to acquire US firms? | Being short increases risk of heart disease | Roche's diabetes drug faces long delay

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