Avandia drop-off erodes GSK profits

Plummeting Avandia sales are taking their toll on GlaxoSmithKline's bottom line. The company reported a 12 percent drop in fourth quarter net, to $2.08 billion, on flat revenues of $11.62 billion. But what's really shaking up observers is the company's 2008 forecast: EPS is expected to fall around 5 percent because of further decline in Avandia sales and increased competition from generics. Asthma drugs Seretide and Advair, for instance, saw their sales leap 10 percent in 2007, but they both go off patent in 2008.

The earnings report included a substantial update on the company's pipeline, which delivered 10 new products in 2007, including the Cervarix vaccine against the HPV virus (which isn't yet approved in the U.S., however). And it stressed the strong performance of GSK's consumer healthcare division, which boosted sales by 14 percent to nearly $6.8 billion.

In announcing the news, outgoing CEO Jean-Pierre Garnier said he's confident of the company's future--after 2008. The company also said it will respond to FDA's request for more data on Cervarix during the second quarter, a move that probably will lead to an advisory committee review.

Meanwhile, the company got a letter from Sen. Charles Grassley, who's asking just when GSK knew about Paxil's suicide risks in young people. Grassley alleges that court documents from a recently dismissed lawsuit showed the company knew about those risks as early as 1999; warnings of those risks weren't added to the drug's label until 2006.

- check out GSK's release (pdf)
- read this MarketWatch summary
- see this article from The Wall Street Journal
- read CNN Money's report on the Grassley probe

ALSO: The prospect of approving Cervarix for a broad audience in the U.S. may be leading to a bad case of cold feet at the FDA. Report