GSK ready to pay £50m to settle patent suits

GlaxoSmithKline, the UK's biggest drug maker, pumped an extra £170m into its provisions for settling lawsuits yesterday, and said it will pay £50m over allegations that it misused patent laws to keep rival antibiotics off the market.

The company said it is selling shareholdings in some of its drug development partners to offset the extra legal charge, which will be taken in its interim results. Users of GSK's Augmentin antibiotic, wholesalers and US health insurers were suing the company, claiming that it knowingly filed invalid patents to hold up the launch of copycat rivals to the drug. The $92m (£50m) settlement of the class actions has to be approved by the Virginia court which invalidated the patents in 2002.

GSK said yesterday it would also settle other outstanding legal claims in the coming months, hence the extra provisioning. "This legal charge is expected to be approximately £170m and will be largely offset by gains realised from the sale of equity investments and other income," it said in a statement.

The arrival of copycat competition to Augmentin and several other drugs has left GSK expecting only flat earnings this year, and it left its guidance unchanged yesterday.