Glaxo to take $3.4B charge over Avandia marketing

By Reuters
Posted Jan. 17 at 1:58 p.m.

GlaxoSmithKline will record a legal charge of 2.2 billion pounds ($3.4 billion) for the fourth quarter, effectively wiping out its profit, as it settles further claims related to Avandia and sales practices.

The charge equates to an after-tax cost of 1.8 billion pounds, more than the 1.45 billion the drugmaker had been expected to make in net income in the three months to December, according to Thomson Reuters consensus forecasts.

“We recognize that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company’s best interests,” the company’s head of global litigation, PD Villarreal, said in a statement. “We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk.”

The charge comes after a 1.57 billion pounds hit taken in the second quarter,  also related in part to claims surrounding the drugmaker’s controversial diabetes pill Avandia.

“The fact that this has come two quarters after the previous one will make people worry … but it doesn’t change the underlying progress the company is making,” said Dominic Valder, an analyst at Evolution Securities, who rates the stock a “buy.”

Read more about the topics in this post: , ,

Companies in this article

Comments are closed.