Glaxosmithkline was dealt a blow last night when European regulators recommended that its blockbuster diabetes drug, Avandia, should be withdrawn from sale amid fears that the treatment could pose serious health risks.
The European Medicines Agency (EMA) said that Avandia, which is used to treat Type-2 diabetes, should be withdrawn from sale after scientific studies discovered a link between the drug and an increased risk of heart attacks.
The US Food and Drug Administration, the body that sanctions medicines for use the United States, also released a statement in conjunction with EMA, saying that it had reached the same scientific conclusions as the European body but was prepared to allow the drug to stay on the market.
Doctors in Europe will now be instructed to prescribe alternative drugs to patients taking Avandia. EMA added that the suspension will remain in place unless convincing data are provided by GSK that identify a group of patients in whom the benefits of the medicine outweigh its risks.
In the US, GSK's biggest market, Avandia will still be available, but GSK will be required to detail the risks of the medicine in greater detail.
"I'm surprised the European agency has decided to remove the product from the market," said Savvas Neophytou, an analyst at Panmure Gordon. "I'm not entirely sure there is a massive difference in the response, although one sounds more draconian in that they're withdrawing the product. The restrictions imposed on the product used in the US are effectively the same.
"I expect this decision, although a lot of the impact of the Avandia franchise in the Glaxo investment thesis has been greatly reduced because of what has happened already over the last three years, could lead to some 3 per cent or so downgrades [on profits]."
Avandia was once GSK's second-biggest revenue earner, raking in $3bn a year. However, since 2007, when a paper published by The New England Journal of Medicine, written by respected cardiologist Steve Nissen, cast doubts over its safety, the group has gradually lost revenue on Avandia. In the first half of 2010, Avandia sales had slipped to £321m, an 18 per cent fall on the same period in 2009.
GSK said that it would work with both sets of regulators.
Ellen Strahlman, GSK's chief medical officer, said: "The company continues to believe that Avandia is an important treatment for patients with Type-2 diabetes and is now working with the FDA and EMA to implement the required actions. GSK will also work closely with other regulatory agencies to comply with any decisions made by them regarding [Avandia]."
In July, GSK set aside £1.57bn to meet outstanding legal charges, including a provision to meet claims over Avandia.
It refused to comment on reports earlier in the same week that it had agreed to pay out $460m to settle a number of cases.