Glaxo Takes $2.36 Billion Charge on Legal Costs
From Associated Press (July 15, 2010)
LONDON -- Pharmaceutical company GlaxoSmithKline said Thursday it expects to take a $2.36 billion charge against second-quarter earnings for the costs of settling court cases over the antidepressant Paxil and diabetes drug Avandia.
The company said the charge includes settlements, agreements to settle and other provisions for long-standing legal cases which also include an investigation of its facility in Cidra, Puerto Rico.
The announcement comes a day after a U.S. Food and Drug Administration panel of experts voted to allow Avandia to remain on the market. The drug faces another review by the European Medicines Agency.
GlaxoSmithKline shares were up 1.6 percent at 1,200 pence in morning trading on the London Stock Exchange.
Glaxo said it has settled the vast majority of product liability cases involving Paxil, which has been linked to birth defects, and a substantial majority of liability cases involving Avandia, which has been associated with a higher risk of heart disease. GSK said it has settled antitrust litigation involving Canadian drug maker Apotex Inc.
The charge also includes an agreement to pay $750 million to settle an investigation of problems at the company’s plant in Puerto Rico.
"The charge we have announced today reflects the company's ongoing efforts to resolve certain long-standing legal cases," said Dan Troy, GSK's general counsel.
"This represents a substantial proportion of GSK's outstanding litigation. This progress is helping us to reduce financial uncertainty and risk for shareholders."
Posted: July 2010