Telegraph writes, Avandia's sales slump this summer was prompted by America's powerful regulator, the Food and Drug Administration, ruling that the drug should carry a warning about its risk of causing heart attacks in patients. Avandia had been counted as one of Glaxo's most high-profile products and was its second-biggest seller after its asthma drug Advair.
Nick Turner, an analyst at Mirabaud Securities in London, who rates Glaxo told Bloomberg, “Sales are really decimated in the U.S, While reduction in operating costs is carrying earnings per share growth, the top line is going backwards.”
On cost savings front, the pharmaceutical company is hoping to save up to £700 million ($1.4 billion) in costs by 2010 with its new "Operational Excellence" cost-cutting program, which will target manufacturing, administration and research investment. "These savings will partly mitigate the expected impact to 2008 earnings from generic competition and lower Avandia sales," said GlaxoSmithKline, "and the associated adverse impact on GlaxoSmithKline's gross margin."
Among the company's other products, sales for the antidepressant pill Wellbutrin fell 38 percent to £135 million; sales of Zofran, a nausea treatment, slumped 86 percent to £32 million; and Coreg IR, to treat high blood pressure, posted a sales decline of 37 percent, to £114 million. All were hit by strong competition from generics.
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