Tonic for Glaxo soothes Seroxat blues

NEW York law enforcer Eliot Spitzer granted GlaxoSmithKline a surprise breathing space in his crusade over its antidepressant Seroxat and its links to suicidal tendencies in children.

Spitzer stunned Glaxo this month by accusing it of misleading doctors about the drug. He is suing the firm, believing it covered up at least four studies on Seroxat - known as Paxil in the US - which showed it was at best no more effective than a dummy drug and at worst harmful.

In an unprecedented move, Glaxo published reams of data this week on Seroxat clinical trials on its website in the interests of 'transparency'.

But in a development that takes some of the heat off Glaxo, Spitzer said this was 'a positive first step toward changing a dangerous industry practice'.

He added: 'We can no longer permit GSK and other pharmaceutical companies to selectively choose what research to make available to physicians and the public.'

In a remarkably conciliatory tone, he said while the decision by GSK 'does not resolve all of the issues in our litigation, it does represent movement in the right direction'.

Embattled Glaxo, which denies the allegations, is delighted. Shares rose 18p to 1153p, helped by share buybacks.

But the group still faces huge risks to its reputation on both sides of the Atlantic. British regulators will unveil the results of an investigation into Seroxat and other antidepressants later this summer.

Glaxo may hope that by putting all its Seroxat studies on the web it will spike its critics' guns. One industry expert said: 'It could call people's bluff. Who is going to read all this information?' John Wilson, a major shareholder and investment director at Standard Life Investments, said: 'I think at the moment Glaxo has done what it can.'

But another fund manager said ominously: 'It's too early to come to any conclusions about the extent of potential damage to the company's reputation.'

Wilson believes the controversy over how Seroxat was marketed and sold should be seen as part of a wider issue weighing on the whole industry. He thinks Spitzer, who has already pursued the Wall Street banks, is gunning for 'big pharma'.

In this respect, it is different to Glaxo's fat-cat pay debacle last year in which the group was singled out for its boardroom greed.

Glaxo would certainly prefer the Seroxat allegations to be seen as an industry issue. However damaging, at least this would dilute the criticism.