Glaxo Takes $2.4B Legal Charge On Avandia & Paxil
Make a commentBy Ed Silverman // July 15th, 2010 // 4:23 am
GlaxoSmithKline is trying aggressively to dispense with nagging and costly litigation and so will take a $2.4 billion charge in its second quarter to settle product-liability lawsuits over its Avandia diabetes pill, antitrust litigation involving the Paxil antidepressant and a US government investigation into its manufacturing site at Cidra, Puerto Rico. A breakdown was not provided, but Glaxo will pay $750 million to settle the probe into the plant, according to a statement.
“They’re trying to put the Avandia litigation issue behind them before earnings and get the story as clean as possible going forward,” Mark Clark, an analyst at Deutsche Bank AG in London, tells Bloomberg News. “Most people are going to say this settles a substantial portion of their litigation and say it’s a positive, and some will balk at the size of the charge. By any standard $2.4 billion is a big charge for a quarter.”
Earlier this week, Glaxo settled about 10,000 of the roughly 13,000 Avandia lawsuits in the US for approximately $460 million. The move may allow the drugmaker to avoid a continual stream of headlines over Avandia safety, and comes as an FDA advisory panel voted to allow the controversial diabetes pill, which has been linked to cardiovascular risk, voted to allow the drug to remain on the market, but with restrictions. FDA officials must now decide whether to follow that recommendation.
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Apotex, Avandia, Diabetes, GlaxoSmithKline, Paxil