UK pharmaceutical company GlaxoSmithKline is looking to cut costs further this year as it reported a sharp drop in fourth-quarter profit on the back of problems in Europe.

The company said it made a net profit of £839m sterling in the final three months of 2012, down nearly 35% on the previous year.

Over the year it made a profit of £4.74 billion compared to 2011 profits of £5.46 billion.

Glaxo blamed the tough European environment for a 3% drop in sales 2012 and said the impact of discounted prices dented growth by around 6 percentage points.

To counter its difficulties, it said it would step up its cost-cutting programme, particularly in Europe, to deliver savings of at least £1 billion in 2016.