Judge's £8bn headache for GSK

SHARES in drugs giant GlaxoSmithKline crashed by more than 8% today, tumbling 140p to 1471p as the group lost a crucial court battle over patents on its top-selling antibiotic, Augmentin.

The overnight ruling in the US could see cheaper generic competitors on sale in the lucrative US market as soon as July, and would have a 'material impact' on earnings, warned chief executive Jean-Pierre Garnier.

Although GSK will appeal against both this latest and previous court rulings, Garnier warned that it could cut forecast earnings growth from the 'mid-teens' to 10% in 2002 and from 'low-teens or better' to 'high single digit' growth the following year.

Augmentin sales in the US were £912m last year - just over 5% of total group sales - and analysts calculated that the revenues could fall by 23% in 2002, to £706m, and as much as 75% the following year, to £176m. Garnier said the group was 'clearly disappointed' with the court's decision and stressed that, regardless of the outcome, it 'will remain focused on achieving the key goals that will deliver long-term growth'.

GlaxoSmithKline is Britain's second-largest company, after oil giant BP. The share-price collapse wiped £8.4bn from its stock market value, taking it to just below £90bn.