TEXT OF STORY

STEVE CHIOTAKIS: In just a few minutes, British drug company GlaxoSmithKline is expected to report a sharp drop in earnings. That, as other big corporations are enjoying some very good results.

Marketplace’s Stephen Beard is with us from London this morning with the latest. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: So has Glaxo just caught a cold or is this something a little more serious?

BEARD: It’s more than a cold, and in fact it’s symptomatic of what’s happening across the pharmaceutical industry. Glaxo has got problems on a number of fronts. It’s best selling anti-herpes drug is facing a lot of competition from generic drug companies. And it’s anti-diabetes blockbuster Avandia, you may recall, ran into huge problems last year when severe side effects were identified. The drugs been withdrawn and Glaxo faces potentially huge compensation claims.

CHIOTAKIS: What about looking forward Stephen? What are the future hopes for Glaxo and really for the pharmaceutical industry?

BEARD: The problem is research and development is costing more and more. But after the really big discoveries, the great products of recent decades, it’s becoming a lot harder to make a break through. Here’s Andrew Packman, pharmaceutical expert with the PWC Consulting Firm.

ANDREW PACKMAN: Developing those new products is simply very difficult. So we have seen late stage failures, and we’ve seen companies putting large amounts into R&D, and simply not managing to bring in those new products.

And a further symptom of that difficulty — Pfizer has just announced the closure of a major search center here in the U.K. — the center that developed Viagra.

CHIOTAKIS: All right, Marketplace’s Stephen Beard in London. Stephen thank you.

BEARD: OK Steve.