GlaxoSmithKline has surprised observers with the announcement that it will record an additional legal charge of $400 million when it reports its fourth-quarter financials next Thursday.
The charge, which was not included in GSK’s previously-announced full-year 2008 earnings guidance, relates to an ongoing investigation conducted by the US Attorney’s Office in Colorado into the company’s marketing and promotional practices for several products between 1997 and 2004.
GSK, which said that it is co-operating fully in the probe, noted that the decision “reflects the current status of the investigation”. However the company acknowledged that “the ultimate liability…may vary from the amount provided as it is dependent upon the outcome of the investigatory process and potential litigation”. In total, GSK now expects to incur fourth-quarter legal charges of £517 million.
In better news for the firm, GSK revealed that it has signed an agreement with the UK government to supply 10.6 million courses of its antiviral Relenza (zanamivir) for use in an influenza pandemic. The government has also just purchased an additional 7.6 doses of Roche’s Tamiflu (oseltamivir), the drug it has been stockpiling since 2005.
This means that the Department of Health has now doubled its stockpile to cover approximately half the UK population. GSK noted that the decision to purchase zanamivir is consistent with recommendations by the European Medicines Agency and the Royal Society and Academy of Medical Sciences to diversify antiviral stockpiles, “especially with the emerging evidence of resistance”.
