Glaxo Avandia Sales Appear To Be Vanishing (GSK)

GlaxoSmithKline’s (NYSE:GSK) Avandia sales might not just weak after the reports of cardiovascular risks were reported.  If this research is accurate, the sales might be on the path to vanishing.  We have not conducted our own research into this and since we are finance geeks we probably won’t do much more digging.  But this is a near-disaster for a blockbuster drug (more than $1 Billion in annual sales) if the figures are accurate.

New research from TNS Healthcare’s DiabetesDynamics USA™ shows that from July through September of 2007 nearly 70% of changes in Avandia prescribing were the result of withdrawals—physicians switching patients to another therapy. In addition, the rate of withdrawals is accelerating, with as many withdrawals in third quarter ’07 alone as in the first and second quarters combined.

According to the data:  “Avandia prescribing has always been dynamic, with our research showing that, during the first half of 2007, 20% of physician consultations resulted in some kind of therapy change,” says Philip O’Hagan, International Client Services Director for TNS Healthcare. “From January through June, 84% of those prescribing changes were positive—physicians starting new patients on Avandia, adding it to existing regimens or switching patients to Avandia from other therapies. From July forward, however, we see a dramatic turnaround, with the majority of Avandia changes now coming from doctors taking patients off the drug.” 

DiabetesDynamics reveals that one of the main reasons physicians are switching patients from Avandia is reports that the drug is linked with increased cardiovascular risks. During the first half of 2007, there were no cases of switching due to cardiac problems, though there were the first rumblings that publicity about side effects was beginning to have an effect. During the third quarter of the year, however, there was a massive change, with cardiac problems now the reason for 20% of Avandia withdrawals.

If this is even remotely accurate, it sure sounds like Glaxosmithkline is feeling some heat. As per Glaxo’s site it says that the Avandia group of products £1,645 million (or $2.3 Billion in dollar terms using today’s currency exchange rates).

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Glaxo shares in teh U.S. are trading up almost 0.5% at $50.87, although its 52-week trading range is $48.30 to $59.98.

Jon C. Ogg
November 6, 2007