GSK returns to profit despite diabetes drug Avandia charge

Wed, 27 Jul 2011
Pharma giant GlaxoSmithKline (GSK) has announced they have returned to profit after a raft of cost-cutting measures were imposed by the company. The news comes after they had to pay a GBP1.6 billion charge to settle litigation concerning the diabetes drug Avandia.

The drug manufacturer returned to profit in the second quarter of this year due to a major cost-cutting exercise, with a GBP1.1bn profit for the three months up to the end of last month, as compared to the GBP304m loss they experienced in 2010.

The litigation charge for the Avandia treatment was due to it being banned in Europe because of a potential link with heart disease.

The rise in profits came even though the company saw a four per cent decrease in sales to GBP6.7 billion as administration costs were nearly halved. The sales for the company, excluding that of Avandia, as well as that of the herpes drug Valtrex, which was affected by increased competition, and their pandemic flu product range, did rise by a total of 5 per cent over the quarter.

GSK have also stated they will manage to cut a further GBP300 million in costs over the rest of the year, as they plan to announce a series of new clinical trial results for drugs in the final stages of testing.

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