The market does not need much of an excuse to punish a stock, and yesterday GlaxoSmithKline gave it just that. The British drugmaker announced that the final trials of a new asthma medication showed that the drug, Relovair, is no better than Advair (also known as Seretide), a similar GSK medication already on the market. Relovair’s main advantage is that patients need only take it once a day, as opposed to Advair’s twice-a-day dose.
The news prompted investors to wipe 4 per cent off GSK’s share price, equivalent to more than £3bn of the company’s value.
Setbacks are part and parcel of being a drugmaker, but this one is more important than most. Asthma medications account for about 30 per cent of GSK’s revenues and, after years of constant sales growth of its respiratory products, they have levelled off. In the third quarter, sales fell by 2 per cent compared with the prior year.