GlaxoSmithKline Posts 2Q Loss

World's second-largest pharmaceutical company by revenue reported a $464 million loss for second quarter as it absorbed a $2.4 billion hit for settling lawsuits.

LONDON (AP) -- GlaxoSmithKline, the world's second-largest pharmaceutical company by revenue, on Wednesday reported a loss of 304 million pounds ($464 million) for the second quarter as the company absorbed a hit of 1.57 billion pounds ($2.4 billion) for settling lawsuits.

The loss for the three months ending June 30 compares to profit of 1.34 billion pounds in the first quarter.

Revenue of 7.025 billion pounds was 4 percent higher than a year earlier.

Excluding major restructuring costs, the company said it reported a profit of 130 million pounds compared to 1.57 billion pounds a year earlier.

"We believe the market will see through this quarter and, with the base business improving," Tom Kemp, analyst at Panmure Gordon & Co., said Wednesday before results were released.

GSK shares were up 0.3 percent at 1,177.5 pence on the London Stock Exchange following the announcement.

GlaxoSmithKline announced last week that it was taking a charge against second-quarter earnings for the costs of settling court cases over the antidepressant Paxil and diabetes drug Avandia, and other provisions for long-standing legal cases which also include an investigation of its facility in Cidra, Puerto Rico.

Glaxo said it had 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 also said it had settled antitrust litigation involving Canadian drug maker Apotex Inc.

"For the quarter, GSK sales were impacted by several individual factors and adverse prior year comparisons. For example, we saw an acceleration of generic competition to Valtrex (treatment for genital herpes) in the U.S.A. and temporary suspension of Rotarix (for gastroenteritis) in the quarter," said Chief Executive Andrew Whitty.

GSK said pharmaceutical sales of 5.8 billion pounds were essentially flat, as a 13 percent drop in U.S. sales were offset by 17 percent in emerging markets and 9 percent in Asia Pacific.

European sales were up 1 percent, and Whitty said there will be continuing downward pressure on sales prices in that market, perhaps trimming 3 percent from prices over the next 18 months.

In a conference call with journalists, Whitty declined to give any further details of the company's exposure to legal cases beyond what it disclosed last week.

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