Avandia woes hurt Glaxo's bottom line

Bottles of Avandia diabetes medication

TEXT OF STORY

Doug Krizner: This morning's earnings from drug maker Eli Lilly beat expectations — the company reports strong sales of the antidepressant Cymbalta.

But the earnings story could be different for British drug king GlaxoSmithKline. Sales of the company's diabetes medicine Avandia have been slumping. And, as Stephen Beard reports, its just one problem for Glaxo.


Stephen Beard: Recent studies link Avandia with an increased risk of heart attacks and strokes. And that, say analysts, has cut global sales of the drug by 23 percent over the last quarter. U.S. prescriptions may be down by 50 percent. Glaxo's latest results will show earnings more than $200 million lower, say analysts.

Justin Urquart-Stewart of Seven Investment says investors are worried because, like all big drug companies, Glaxo is struggling to come with new medicines.

Justin Urquart-Stewart: This is the problem with drug companies — they have their blockbusters, which are successful for a while, but then they need to have a pipeline coming through. And if any one of those blockbusters fails, they are in serious trouble.

The fate of Avandia now hangs on a decision by the U.S. Food and Drug Administration. It meets next week to consider whether or not to ban the medicine.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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