GlaxoSmithKline announces Q4 2010 legal charge
GlaxoSmithKline (GSK) today announces that it expects to record a legal charge for the fourth quarter of 2010 of £2.2 billion ($3.4 billion) (equating to an after tax cost of £1.8 billion).
The charge primarily relates to additional provisioning in respect of the investigation by the US Attorney’s Office for the District of Colorado into the Group’s US sales and promotional practices and for product liability cases regarding Avandia (rosiglitazone).
Regarding Avandia, in July 2010 the company took a provision for product liability cases relating to the product that had been settled or received at that time. As previously stated, the company has continued to receive new product liability cases regarding Avandiain the United States. The number of new claims received is substantial and the Group has now completed its assessment of these additional cases and an estimate of likely future claims.
PD Villarreal SVP Global Litigation, GSK, said: “We recognise that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company’s best interests. We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk.”
Provisions are made, after taking appropriate legal and other specialist advice, when a reasonable estimate can be made of the likely outcome of the dispute. The ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations. The Group’s position could change over time, and there can, therefore, be no assurance that any losses that result from the outcome of any legal proceedings will not exceed the amount of the provisions reported in the Group’s financial accounts by a material amount.
GlaxoSmithKline – one of the world’s leading research-based pharmaceutical and healthcare companies – is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For further information please visit www.gsk.com
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