LONDON - British pharmaceuticals giant GlaxoSmithKline (GSK) announced a strong rise in first-quarter profits Thursday and said it had resolved drug manufacturing issues with US regulators at its Puerto Rico plant.
Pre-tax profits increased by 17 percent in the first quarter of 2005 to 1.711 billion pounds (2.527 billion euros, 3.261 billion dollars) compared with the same period in 2004, beating market forecasts.
GSK said earlier it struck a deal with the US Food and Drug Administration (FDA) over production problems of two tablet drugs at the plant -- depression and anxiety treatment Paxil CR and type 2 diabetes treatment Avandamet.
The swift resolution of the situation and absence of financial penalties was welcomed by the market as GlaxoSmithKline surged 6.37 percent to 1320 pence in London trade while the FTSE fell 0.22 percent to 4778.80 points.
Meanwhile, turnover at the group rose 4.0 percent to 5.036 billion pounds, matching analysts` predictions.
"GSK is off to an excellent start in 2005," said chief executive Jean-Pierre Garnier.
"We are now entering a new phase of growth for the company as the impact of generic competition diminishes and the underlying strength of our business shows through," Garnier added.
"GSK`s future is bright and in 2005 we are on track to deliver our guidance of earnings-per-share growth in the low double-digit range."
Last month, the group said that the FDA had halted distribution of the two medicines due to unspecified "manufacturing issues".
GSK said it agreed to remedy the problems, without having to pay a fine and that it expected to resume deliveries of the affected drugs to the US market in the middle of this year.
"GlaxoSmithKline today announced that it has reached agreement on a Consent Decree with the FDA regarding the company`s Cidra, Puerto Rico, manufacturing site," the company said in a separate statement.
"Based on the terms of the Consent Decree, the company can continue to manufacture products at the site, and expects to begin re-supplying the US and other markets with both Paxil CR and Avandamet in mid-year."
Garnier told reporters that the group`s relationship with the FDA remained "excellent", adding: "Since the incident (at Puerto Rico) we`ve already received approval for two important products ... and the FDA clearly by not giving us a major fine is showing some very good will."

04/28/2005 14:24 GMT