How the competition fairs amidst Glaxo SmithKline troubles
Glaxo SmithKline has been accused of promoting their antidepressant drugs, Paxil and Wellbutrin for other uses other than those which had been approved by the FDA. This has been among the long string of lawsuits that have plagued this drug manufacturer with others including another drug known as Avandia. It recently came to light that this particular drug had an adverse effect on diabetic patients that resulted in them having heart attacks. While it is reported that over ten drugs from Glaxo SmithKline are under investigation by the FDA due to misrepresentation of their use, the future for this pharmaceutical company has started becoming gloomy. If any of this manufacturer’s drugs are found to be defective in one way or another, I believe that a major pullout from investors will be inevitable. While competitors such as Novartis (NYSE: NVS) have been putting a great deal of effort into the development of new medications and achieving success the same cannot be said for Glaxo SmithKline. The recent FDA approval for Novartis’s new drug Afinitor that is the first to treat patients with non cancerous kidney tumors, I must say things are looking up for this competitor. The market also seems to have responded to this new development as Novartis share price saw a significant increase over the past few days. Merck (NYSE: MRK) has also in turn partnered up with Ambryx in a $303 million deal for the development of rationally optimized biologic drug conjugates that is sure to prove extremely beneficial to all shareholders in the near future.
Is there any chance of recovery for Glaxo SmithKline?
Now that Glaxo SmithKline has kicked up a dust storm that does not look like it will settle any time soon, what are the options open to them in order to restore investor confidence? I believe this is one of those situations that will require it to take the path of least resistance. In short, rather than deciding to pay hefty sums of money to lawyers in order to contest the court’s ruling, it should humbly admit its mistakes and agree to settle as it has done in this settlement. Taking a keener look at how the drugs are portrayed in advertising campaigns and finding a more transparent way of passing the true information about he drugs will also go a long way in wining their customer’s trust back. This drug manufacturer will also have to deal with the negative perception that has been revealed in investigations which claim that it mainly targeted black diabetic patients in their marketing scheme. I believe that a great deal of investors still have some confidence in Glaxo SmithKline although its share price has continued to drop significantly and it will be up to the management to find more viable ways to dig themselves from the pit they have gotten themselves in.
In conclusion, I believe that Glaxo SmithKline has become an institution in its own right that should not be allowed to fail and the move by the federal to monitor it for the next five years supports my belief. There is still hope for this pharmaceutical giant.