£4bn legal costs send GSK profits diving 60%

Legal costs of £4 billion dragged profits at the UK's largest pharmaceutical company GlaxoSmithKline down by 60 per cent last year.

The company has been settling long-standing legal claims, including many concerning its controversial diabetes drug Avandia, which has now been taken off the market in Europe following allegations it causes an increased risk of heart attacks.

GSK yesterday reported pre-tax profits of 3.2bn in 2010 while sales were flat at 28.4bn. It made a loss of 476 million in the final quarter, in which it paid out 2.2bn in legal costs.

The group also incurred 1.3bn of restructuring charges last year as it cut costs and jobs across its global operations.

It announced plans to sell off some of its lesser known consumer brands, which are mainly sold in the US and Europe, to allow it to focus on blockbuster names such as Lucozade, Sensodyne, Horlicks and Panadol.

Chief executive Andrew Witty said he had no plans to buy Pfizer's site in Kent after GSK's US rival this week announced plans to close its research and development operation, but he might be interested in some of the 2,400 staff.

Shares in the company rose 3.6 per cent yesterday to close at 1,168p.

Mike Mitchell, an analyst at Seymour Pierce, said: "The fourth quarter, while overshadowed by the impact of the previously announced legal charge, reflects continued underlying progress."

GSK's manufacturing operations include sites at Montrose and Irvine.