GlaxoSmithKline's shares have taken another knock amid fears that the manufacturing problems it has had recently could prove to be more costly than originally thought.

Investors grew worried over reports that the US Food and Drug Administration may ask the company to sign a so-called consent decree over problems at its Cidra, Puerto Rico manufacturing facility. Earlier this month, the agency and the US Department of Justice seized batches of GSK’s diabetes treatment Avandamet (rosiglitazone/metformin), and its anti-depressant, Paxil CR (paroxetine controlled-release), saying they failed to meet quality standards [[07/03/05a]]. No discussions have yet taken place between GSK and the FDA over a consent decree which could lead to a halt of all manufacturing at the facility and a hefty fine.

How hefty remains to be seen but the firm’s stock took a dip on a note issued by Nomura analyst Michael Leacock, and reported by Reuters, who said the US government could require disgorgement of profits made by GSK from selling the two drugs made at the plant. “Assuming any consent decree were only for the year of 2004, when we are aware that there were outstanding manufacturing issues, a payment of up to £720 million could be possible,” he is quoted as saying.

It was also noted that in May 2002, Schering-Plough agreed to pay a record $500 million fine after signing a decree to improve manufacturing standards at its facilities in Puerto Rico and New Jersey. The Cidra plant, about which the FDA censured GSK in 2002, November 2003 and December last year, is the sole source of supply of Paxil CR and Avandamet for the US market. The company had earlier stated that the financial impact on earnings is uncertain [[09/03/05c]]. With the threat if a huge fine looming over GSK, that uncertainty has increased.

- Meanwhile, GSK says it has completed patient recruitment into a new clinical trial that will assess the effects of its 5-alpha-reductase inhibitor, Avodart (dutasteride), in reducing the risk of prostate cancer in men at increased risk of this disease.

The four-year trial – known as Reduce – has enrolled more than 8,200 high-risk men aged 50 to 75 years and aims to determine whether taking Avodart daily reduces the risk of prostate cancer in this group at two years and four years.

Avodart is currently indicated for the treatment of BPH and for reducing the risk of acute urinary retention and BPH-related surgery, but not for prostate cancer [[16/01/03e]]. Its potential in reducing the risk of prostate cancer was first suggested by an analysis of Phase III BPH trials, which showed that the incidence of diagnosed prostate cancer over the first 27 months was 2.5% in the placebo group and 1.2% in the Avodart group.