Legal costs dent GlaxoSmithKline's Q2

GSK has reported a loss for its second quarter due to litigation costs related to Avandia and other problems.

In the first half of Q2, total sales appeared promising - growing by 7% - but excluding pandemic products this scaled back the figures to a 1% rise, and overall the company recorded a £252 million loss for the quarter.

This was due to the £1.58 billion bill to settle three recent legal disputes, including litigation on Avandia. The troubled diabetes drug, which has faced renewed safety concerns this year, saw year-on-year sales of the second quarter dip £26 million.

Total vaccine sales for the company were £939 million (up 17%) and included £275 million of pandemic H1N1 vaccine sales. Sales for the company’s top selling Advair remained static at £1.3 billion, but respiratory products delivered strong growth including Avamys/Veramyst which was up 19% to £57 million.

Other strong performances seen were from Lovaza, Tykerb, Arixtra, Avodart and Votrient.

Operating profit before major restructuring for second quarter was at £641 million, an 80% decline in constant exchange rate terms primarily due to significant legal costs in the quarter and other lower operating income.

Chief executive Andrew Witty said: “This quarter, as we continue to control and reduce costs, we have again confirmed that we expect to deliver a broadly stable operating profit margin for 2010 (before legal charges and the 2009 ViiV Healthcare accounting gain).

“We also made progress to de-risk our business and reduce financial uncertainty through resolving a broad range of long-standing legal cases.”

Brett Wells