GSK's profit "wiped out" by legal charge

 
City A.M. Reporter
GlaxoSmithKline will record a legal charge of £2.2bn for the fourth quarter, effectively wiping out its profit, as it settles further claims related to Avandia and sales practices.

The charge equates to an after-tax cost of £1.8bn, more than the £1.45bn the drugmaker had been expected to make in net income during the three months to December, according to Thomson Reuters consensus forecasts.

Shares in Britain's biggest pharmaceuticals group fell 1.6 per cent on the news, underperforming a 0.7 per cent advance in the European sector.

"We recognise that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company's best interests," the company's head of global litigation, PD Villarreal, said in a statement.

"We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk."

The charge comes after a £1.57bn hit taken in the second quarter, which was also related in part to claims surrounding GSK's controversial diabetes pill Avandia.