| CATEGORY: BROKER RECOMMENDATIONS SECTOR: PHARMACEUTICALS & BIOTECHNOLOGY |
Broker snap: Paxil fears overdone at Glaxo |
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Wed 14 Oct 2009
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LONDON (SHARECAST) - Yesterday’s setback in a US court for drugs giant GlaxoSmithKline may dent the share price, in which case broker Panmure Gordon would be ‘aggressive buyers’ of the stock.
A jury in a Philadelphia court ruled on Tuesday that Glaxo had failed to give sufficient warnings to doctors and pregnant women that its Paxil antidepressant could cause birth defects, and awarded damages of $2.5m to the plaintiff.
‘With a further 600 similar cases in the queue, a liability totalling $1.5bn is possible. We note the company is likely to appeal and our analysis of the situation makes us confident that the liability will not amount to anywhere near $1.5bn,’ the broker said.
Panmure Gordon believes the jury failed to properly take note of Glaxo’s change to the Paxil package insert in September 2005 in which the documentation made reference to an increased risk of congenital malformations in infants born to mothers who took Paxil during the first trimester of pregnancy.
‘Clearly the jury thought the information was suppressed. In that, we think the company will have a good chance of winning on appeal and we expect the company to also prevail against a number of the remaining 600 cases,’ Panmure Gordon believes.
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