GSK to take £1.57bn hit in legal settlement charges
Pharmaceutical company to pay out for case settlements spanning last 20 years
GlaxoSmithkline will book a £1.57bn ($2.41bn) charge in the second quarter to settle a spate of long-standing legal issues, including litigation relating to two of its major products, Paxil and Avandia.
The charge - in addition to an existing £2.3bn of provisions - includes settlements, agreements to settle and provisioning for cases spanning the last two decades.
Analysts expect the charge will cut second-quarter earnings-per-share by more than 26p, which would effectively wipe out most of the group's profit for the period, says telegraph.co.uk.
According to GSK, a "substantial majority" of product liability cases relate to its blockbuster diabetes pill Avandia, on which it received a favourable ruling this week from US regulators, who had nearly banned it after widespread concern over its side-effects.
GSK is reported to have settled about 10,000 of an estimated 13,000 Avandia cases for $460m.
The pharmaceutical company also faces issues linking its antidepressant drug Paxil with birth defects, suicidal behaviour, and violence.
The legal charge will also allow the company to settle an investigation into alleged manufacturing problems at its former plant in Cidra, Puerto Rico.