GlaxoSmithKline drops anti-obesity drug as profits fall

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GLAXOSMITHKLINE, THE UK's largest pharmaceuticals company, saw its profits drop 9 per cent last year after rival drugs swept on to the market, depriving the group of $1.5bn (pounds 800m) of sales.

Jean Pierre Garnier, the chief executive, said 2004 was "always going to be a tough year" for the company as many of its patents ran out, opening the door for rival generic versions of its drugs to go on sale. It also announced it had dropped the development of an anti-obesity drug, after clinical trials proved disappointing.

Sales across the group fell 5 per cent to pounds 20.3bn in 2004, hit by generic rivals to its antidepressants Wellbutrin and Paxil. Pre-tax profits for the year declined 9 per cent to pounds 6.1bn. Mr Garnier said the group had taken the worst hit from generic drugs for some years, and it now had 15 key new drugs that are due to produce crucial testing results in 2005. "We are going to find out if all our efforts to develop our pipeline will pay off," he said.

One of this year's most eagerly awaited findings will be test results of its latest HIV treatment. Dr Tachi Yamada, the head of research and development, said: "Many people think HIV is purely a problem in the developing world, but it is still an issue across the globe."

Most HIV treatments attempt to kill the virus, but GSK's treatment targets the cells the HIV virus infects, preventing it from spreading.

Mr Garnier said investors had underestimated the potential for its cervical cancer treatment, which it hopes will vaccinate millions of women against the disease. It is due to enter its final testing phase, and GSK claims it could eradicate 70 per cent of cervical cancer cases. "Most analyst consensus on the Cervarix vaccine is too low. Demand is going to expand dramatically," he said. Analysts are forecasting sales of $1bn.

Another vaccine GSK is pinning its hopes on this year works against the most common cause of diarrhoea, which infects 125 million children and kills 440,000 people a year.

The company released the findings of a study into its asthma treatment yesterday, which compared its success with a similar drug from its rival AstraZeneca. GSK claims research into the effectiveness of Seretide showed its patients had about an extra 24 days free from symptoms than patients taking AstraZeneca's Symbicort.