Lawsuit over Avandia overshadows Glaxo's launch of new diet pill

The drug giant GlaxoSmithKline is seeking to move on from the furore surrounding its Avandia diabetes drug with the launch of an over-the-counter diet pill.

Alli, which is the first prescription weight-control drug to be switched to over-the-counter sales and the only one to have won Food and Drug Administration approval, will go on sale in the US next week.

The launch was overshadowed yesterday by the news that Glaxo faces a lawsuit from US investors who are claiming that the drug maker misled shareholders about the safety of Avandia.

Shares in Glaxo have been tumbling since a study published in May linked Avandia to an increased risk of heart attack. Although Glaxo disputes the findings, sales and prescriptions of the drug, which is the company's second-best seller, have been falling.

The law firm Kaplan Fox & Kilsheimer said it had filed a class action suit in the US District Court for the Southern District of New York against Glaxo, alleging the company had made false statements. The suit was made on behalf of anyone who purchased shares in the company between 27 October 2005 and 21 May this year, with plaintiffs given 60 days to act.

The complaint alleges that Glaxo "failed to adequately disclose the fact it had performed a meta-analysis - a pooled analysis of several clinical trials - of Avandia which showed an increased risk of heart attacks".

A spokesman for Glaxo said the company would vigorously defend its medicine. "GSK has acted responsibly, transparently and with the best interest of patients in mind," he said. "Any fair examination of the company's record will show that GSK has been transparent in its efforts to thoroughly study the safety and effectiveness of Avandia, and to widely communicate that information to governments, regulatory authorities, scientific peers, physicians and others in a variety of ways."

Despite the recent hit to the share price, analysts remain positive on the stock due to the potential of its other new products, including its breast cancer drug Tykerb, which was launched in the US in March.

Peter Cartwright at Evolution Securities, said the fall in the share price will "prove to be excessive when set against the longer-term hit to group earnings from the Avandia safety issue".

Glaxo said Alli, which it hopes will be on sale in Europe in 2008, will be one of the largest launches the company has ever undertaken. Analysts are expecting Glaxo to spend around $150m this year on marketing Alli, which is a half-dose version of Roche's prescription drug Xenical and works by reducing the amount of fat the body absorbs from food.

Glaxo is stressing that the drug must be taken in conjunction with a low-fat diet and is being marketed to serious dieters in the hope it will not be seen as a fad. It will retail at around $55 to $60 for a month's supply.

The company's new £50m Clinical Imaging Centre in west London, which will focus on the research of major diseases, including cancer and neurological diseases, is being opened today by the Trade and Industry Secretary Alistair Darling.