Flat sales combined with hefty restructuring charges and legal fees added up to a $456 million loss for GlaxoSmithKline in the second quarter.
The London-based pharmaceutical giant, which has its North American headquarters in Research Triangle Park, reported this morning that U.S. pharmaceutical sales fell 13 percent in the second quarter, a decline that was offset by increased sales elsewhere around the world. Sales of consumer products such as Sensodyne toothpaste rose 3 percent.
Total revenue totaled $10.5 billion, unchanged from a year ago. Sales were hurt by generic competition to the genital herpes medicine Valtrex and temporary suspension of Rotarix, a treatment for gastroenteritis, in the U.S. market, CEO Andrew Witty said in a statement released by the company.
"Going forward we are confident our competitiveness in the U.S. market will improve," Witty said. "However, we also acknowledge that in the short run our underlying U.S. business performance will be somewhat masked by the continued impact of genericisation of Valtrex sales and reductions in pricing resulting from healthcare reform."
Excluding restructuring costs, the company reported a profit of $273 million, down 96 percent after adjusting for currency fluctuations.
GSK said last week that it would spend a record amount -- $2.36 billion -- on legal settlements and fees in the second quarter. Much of that money will go to settle "the substantial majority" of personal injury lawsuits filed by patients who claim they suffered heart attacks and strokes from taking the diabetes drug Avandia; and to settle antitrust and patent infringement lawsuits involving the anti-depressant Paxil.
The company also expects to pay $750 million in civil and criminal penalties related to a government investigation of deficiencies at a drug manufacturing plant in Puerto Rico. The plant was closed in 2007.
Last week a Food and Drug Administration advisory panel recommended that Avandia remain on the market despite a finding that it increases the risk of heart attacks. Sales of Avandia, which generated more than $3 billion in revenue in 2006, plunged to $1.1 billion last year in the wake of a 2007 study that linked the drug to heart attacks. That led to the addition of a strict warning about the risk to the drug's label.
In the latest quarter, Avandia sales in the U.S. market declined 43 percent after adjusting for currency fluctuations.
Restructuring costs totaled $885 million in the second quarter. Like other large drug companies, GSK has been laying off workers and working to improve the productivity of its research-and-development efforts in recent years.
GSK's stock-like American Depositary Receipts were trading at $36.03 this morning, down 34 cents.
