GlaxoSmithKline has reported a 21.6% fall in net income to £1.03 billion for the third quarter which is a better performance than analysts expected.

Group turnover slipped 2% to £5.88 billion, while pharmaceutical sales fell 4% to £4.89 billion, hit by generic competition and lower sales of the diabetes drug Avandia (rosiglitazone). Revenues from the latter were down 23% to £191 million, amid continuing fears that the drug could increase the risk of heart attack, and GSK acknowledged that the outlook for the drug “remains negative”.

Generic competition hit sales of Zofran (ondansetron), GSK’s nausea treatment for patients undergoing chemotherapy for cancer, which fell 9% to £33 million, while the antidepressant Wellbutrin (bupropion) slumped 67% to £53 million. Sales of the heart disease drug Coreg (carvedilol) sank 69% to £50 million, while ReQuip (ropinirole), for Parkinson’s disease and restless legs syndrome, fell 43% to £56 million.

It was not all doom and gloom, however, and Advair/Seretide (salmeterol and fluticasone) for asthma and chronic obstructive pulmonary disease grew 7% to £982 million. GSK's vaccine sales climbed 12% to £730 million.

However, as is often the case when talking about GSK, much discussion has turned to the possibility of acquisitions. Speaking on a conference call, chief executive Andrew Witty said that the turmoil in financial markets has certainly created opportunities for purchases, especially in the biotechnology area where many companies are struggling to get financing.

Nevertheless, Mr Witty suggested that a major acquistion is highly unlikely and small-to-medium-sized deals will be the way forward. He added that the company is going to “extremely choosy about what we buy".

To fund any deals, GSK is going to call a halt to its ongoing £12 billion share buy-back scheme, saying that “we do not currently expect to make significant share repurchases in 2009". The company added that it iis sticking to his full-year 2008 earnings guidance of a "mid-single-digit" decline in 2008 earnings.