GlaxoSmithKline (NYSE:GSK) swung to a loss in the fourth-quarter amid heavy litigation and restructuring fees, though it still plans on buying back shares in 2011 and moving forward with its overhaul.
Britain’s largest drug maker posted a net loss for the three months ended Dec. 31 of 690 million pounds, or $1.13 billion, down 30% compared with a profit of 1.63 billion pounds in the same quarter last year.
Earnings were impacted primarily by a 2.2 billion pound legal charge to settle litigation related to Avandia and past U.S. sales practices, as well as other restructuring costs related to the company’s long-term overhaul.
“The changes we have made are delivering diversified underlying sales growth, increasing pipeline potential and improved cash generation,” said Glaxo CEO Andrew Witty. “These elements are at the core of our strategy to address the market challenges we identified and to deliver sustained financial performance.”
Revenue for the London-based company was 7.2 billion pounds, down about 11% from the year-earlier period, helped by underlying sales growth, or those excluding pandemic products, of 4.5%.
Looking ahead, the company said the “washout” of pandemic products, Avandia and Valtrex, which together represented 2 billion pounds, “will clearly impact” its reported sales and margin for the year.
Despite the losses though, the company plans to move forward with its restructuring, and repurchase 1 billion pounds to 2 billion pounds worth of its shares.
“Whilst our operating environment remains challenging, I believe we have made significant progress through restructuring and a rigorous returns-based approach to capital allocation,” Witty said.