GlaxoSmithKline to take $3.4B charge on Avandia
Posted: 3:58 pm Mon, January 17, 2011
LONDON — Pharmaceutical company GlaxoSmithKline PLC said Monday it will take a 2.2 billion pounds ($3.4 billion) charge against earnings in the fourth quarter to provide for litigation over its diabetes drug, Avandia.
The company said the charge is due mainly to additional costs related to the investigation of the company’s sales and promotional practices by the U.S. Attorney for Colorado.
In September, European regulators ordered Avandia off the market and the U.S. Food and Drug Administration restricted its use in the United States because of evidence that the drug increased the risk of heart attacks.
The charge is in addition to a charge of $2.4 billion announced in July, Glaxo said. The company said it has continued to receive new claims.
GlaxoSmithKline shares were down 0.1 percent at 1,223.5 pence following the announcement.
“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,” said P.D. Villarreal, senior vice president for global litigation.
“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,” he said.
There was no certainty that the provisions announced will cover the full legal bill, the company said.
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