GlaxoSmithKline convinced a U.S. regulatory panel this week to keep its best-selling diabetes drug, Avandia, on the market. Now comes the hard part: persuading doctors to use a medicine linked to heart attacks.
The U.S. Food and Drug Administration committee of advisers said this week that the diabetes pill should carry new warnings about cardiovascular risks. Glaxo shares had their biggest gain in two years yesterday after the advisory panel decided not to recommend the withdrawal of Avandia, which brought in $3.3 billion in 2006 for the London-based company, Europe's largest drugmaker.
To hold onto even a portion of that revenue, Glaxo will have to spend more on marketing a product that analysts had estimated would generate $6 billion by 2011. Glaxo shares may resume a two-month decline that began in May as the company struggles for enough Avandia sales to keep profit growing.
``Glaxo will probably receive a black-box warning and the sales will probably not recover to the previous level,'' Pascale Boyer Barresi, an analyst at Bordier & Cie in Geneva, said in an interview.
Avandia sales ``will probably recover 10 to 15 percent, but the decline was so far I think once doctors have changed their patients, they will not switch back,'' he said.
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