Glaxosmithkline plc (ADR) (NYSE:GSK) could face a lengthy court battle against families in United Kingdom seeking compensation for damages caused by its now withdrawn diabetes drug, Avandia, according to a report from Reuters.
Express Solicitors, a law firm based in Manchester, started its proceedings on four complaints against GlaxoSmithKline plc (ADR) (NYSE:GSK) in British courts over Avandia, on Wednesday. The law firm has an additional 15 cases on its file, and it believed that it was the first to start court proceedings against the company.
Daniel Slade, lawyer at Express Solicitor said, “Even though a settlement was reached in the U.S. to settle lawsuits, it seems GSK wishes to put up a fight in the UK as indicated in correspondence pre-proceedings.”
During the court proceedings, Glaxosmithkline indicated its willingness to spend 600,000 pounds or $945,000 to defend one of the cases. The actual claim was just a small part of the money the company is willing to spend to defend the cases.
A spokesperson for GSK said, “We continue to believe that the company acted appropriately and responsibly in its management of Avandia. We have every sympathy for people with health complications associated with diabetes and those who care for them. Unfortunately, we are unable to comment on individual legal cases.”
Glaxosmithkline introduced Avandia in the United Kingdom in 2000 to treat people suffering from type 2 diabetes who are no longer responding sufficiently to older diabetes drugs. According to Express Solicitor, many patients decided to use Avandia, and would be eligible for compensation for the harm or death of their love ones. The medicine was linked to an increased risk of possible heart problems, which prompted European authorities to pull it out of the market.
In the United States, the company agreed to pay millions of dollars to settle similar complaints.
On the other hand, analysts at Barclays Equity Research perceived positive signs for GlaxoSmithKline plc (ADR) (NYSE:GSK) to receive a positive recommendation from FDA for the approval of its respiratory drug called Breo.
According to analysts, the recent FDA panel recommendation for the approval of Boeringer’s LABA for COPD is a sign that the agency is “constructive on approval of respiratory agents.” The analysts said, “We do not fear the 7 March Adcom for GSK’s Breo and, conversely, see 2013 as likely to be a year of big strides in respiratory for GSK.”
The analysts reiterated their overweight rating for the shares of GSK citing that a dividend yield of 5.5% and share repurchases would make the equity attractive.