GlaxoSmithKline suffered a net loss of over $1 billion in the final quarter of 2010 on huge legal charges largely linked to its former blockbuster diabetes product Avandia, the British group said today.
GSK reported a loss after tax of £690m sterling for the final three months of last year, which compared to a net profit £1.630 billion in the fourth quarter of 2009.
'Corporate and other unallocated costs increased significantly as a result of the higher legal charges in the quarter and the unfavourable comparison with Q4 2009,' the company said in a statement.
'The group is involved in various legal and administrative proceedings, principally product liability, intellectual property, tax, anti-trust and governmental investigations and related private litigation concerning sales, marketing and pricing,' GSK added.
The pharmaceutical giant had last month announced that it would take a US legal hit of £2.2 billion linked to its former blockbuster product Avandia.
GSK was rocked in September when the EU medicines regulator decided to pull Avandia off the shelves over fears it increases the risk of heart attack and strokes. Regulators have also restricted its availability in the US.
The EU decided to pull the drug due to concerns over its active substance rosiglitazone. It decided also to halt the sale of Glaxo's other diabetes drugs, Avandamet and Avaglim, since they too contained rosiglitazone.
'The 'washout' of pandemic products, Avandia and Valtrex, which altogether represented sales of more than £2 billion in 2010, will clearly impact our reported sales and margin for the year and especially during the first half,' the company said.
Sales of GSK's herpes treatment Valtrex have been hit by generic competition. GSK added that the group's total net profit slumped 70% to £1.634 billion in 2010 from £5.531 billion in 2009.
The company meanwhile yesterday announced the sale of its stake in US company Quest Diagnostics for $1.7 billion.
