Glaxo plans more savings as flu windfall dwindles

GlaxoSmithKline Plc is to cut more costs and exit some areas of research in the face of tough generic competition, as a temporary boost from swine flu that buoyed fourth-quarter profits starts to dwindle. Earnings per share grew 33 per cent in the three months to December, beating expectations, helped by a one-off accounting gain from a HIV joint venture with Pfizer Inc and record sales of H1N1 vaccines and flu drug Relenza, Europe's biggest drugmaker said on Thursday. The flu windfall, however, is now fading as countries cut back orders for vaccines against a pandemic that has turned out to be less serious than originally feared. At the same time, sales of herpes drug Valtrex are plunging, following expiry of its US patent, making 2010 a tricky year for Glaxo. But Chief Executive Andrew Witty said he was "increasingly confident" about prospects in 2010 and predicted operating margins would be broadly similar to those in 2009. Pharmaceutical companies around the world are being squeezed by crimped government healthcare budgets and the loss of patent protection on many previous blockbusters. Shares in Glaxo rose 1.5 per cent by 1220 GMT.