Third Quarter Profits Damaged by Avandia Restrictions
Glaxo is feeling the pinch in its third quarter profits after the FDA placed severe restrictions on the availability of its extremely popular drug Avandia, which is used to treat type 2 diabetes.
When data from the company's third quarter returns came in, Glaxo officials found that they had experienced a 3.5 percent loss in earnings. Much of this loss was the result of generic competition in the market. But the fact that Avandia has been banned from the shelves in Europe coupled with the recent FDA restrictions placed against Avandia in the U.S. certainly had a major impact.
Glaxo is expecting low sales on Avandia because of the high number of lawsuit rulings against the company in regards to Avandia and Paxil, as well as from generic competition from popular herpes medications like Valtrex, which actually drove the company’s sales down by 8 percent in the U.S. and 9 percent in Europe.
CEO Andrew Witty has stated publicly that that third-quarter revenue did go down by at least 2 percent because of the FDA restrictions in the U.S. alone. Of course, the government cuts in Europe adds to the decline. Glaxo is definitely feeling the loss. At one point, Avandia was the only new product the company had to offer; hence, a lot of hopes were hinged on its success. The many legal problems of the company along with a drop in sales certainly have Glaxo on their toes. If the lawsuits and investigations don't stop soon, Glaxo is going to continue to feel the pressure on them as more quarterly reports come back with little to show.
