Glaxo profits fall amid Avandia blow

Drugs giant GlaxoSmithKline today reported a £147m (€165.5m) hit after writing off stocks of its controversial diabetes drug Avandia.

European regulators last month suspended Avandia and further strict restrictions were placed on its US sales following evidence linking the treatment to an increased risk of heart attack.

Glaxo said the blow contributed to a 2% fall in sales to £6.8bn (€7.65bn) in the third quarter to September 30.

Its third quarter results were also impacted by price cuts to remain competitive following US health reforms, as well as slower business across Europe due to government austerity measures – together knocking around 2% off sales, the group said.

Pre-tax profits fell 10% to £1.97bn (€2.2bn) in the quarter.

Results showed sales of Avandia plunged 56% to £70m (€78.8m) and the group expects global sales of around £100m (€112.5m) to £150m (€168.9m) in the second half, falling to “minimal” levels thereafter.

Andrew Witty, chief executive of Glaxo, said last month’s decision on Avandia helped reduce regulatory uncertainty surrounding the drug, but added there were further difficulties to face in the pharmaceutical industry.

“Clearly our operating environment is challenging and the measures being put in place by governments to reform healthcare and reduce deficits are impacting our performance along with others in our sector.”