The drugmaker is having a rough time. The earnings report released today shows a steeper decline in fourth-quarter profit than analysts estimated and, to top it off, Glaxo ceo JP Garnier says earnings will drop this year, mostly due to docs abandoning the Avandia diabetes pill over safety concerns.

In response, Glaxo shares plunged as much as 9.5 percent earlier, the most in almost nine years, Bloomberg News points out. Net income fell 10 percent to $2.1 billion, missing analyst estimates. Revenue was little changed, with drug sales dropping 2 percent. Avandia sales, in particular, fell 55 percent, continuing a slide after a study last May linked the pill to an increased risk of heart attacks and strokes. Several other best-sellers, such as Coreg for high blood pressure and antidepressant Wellbutrin, faced greater competition from generic drugs. (Here is the Glaxo report).

This year “is more of a swing year than I’ve ever seen,” said who will be succeeded by Andrew Witty shortly. “There are more unknowns, pluses and minuses, more potential for variability in 2008. There is still a certain unknown of whether we can resurrect Avandia…Most pharmaceutical companies are facing generic expirations in 2010 and 2011. We are facing it now. We are going to have to go through a tough year now in 2008.”

“Avandia’s hit Glaxo quite hard,” Collins Stewart analyst Navid Malik tells Bloomberg. “The market’s taking no prisoners right now, and people are generally panicking about future earnings growth.”

Meanwhile, five of Glaxo’s best-selling meds will lose patent protection in 2008: Lamictal for epilepsy, antidepressants Wellbutrin XL and Paxil CR, migraine pill Imitrex, and the original Requip for restless legs syndrome. And Glaxo is still waiting for FDA approval of its Cervarix HPV vaccine, which is already sold in Europe. The agency delayed the product in December, and Glaxo still isn’t saying whether Cervarix will reach the US this year.

Separately, Witty say Glaxo’s consumer business won’t be sold.