Glaxo down as agency warns against Avandia

The Medicines and Healthcare products Regulatory Agency warned that the heart risks associated with Avandia - which was once Glaxo's best-selling product and is still used by tens of thousands of Britons meant "it no longer has a place on the UK market".

Avandia sales peaked at £1.4 billion in 2006, but fell to £771 million last year amid safety fears. Its value would drop off much more rapidly if the MHRA's warning influences a special meeting the European Medicines Agency - which decides whether drugs should be used by patients in the EU - called to investigate the drug.

The MHRA said it would "robustly" put forward its position on Avandia at the meeting on Wednesday.

The latest concerns came to light after the British Medical Journal found that the Commission on Human Medicines - a group that advises Government ministers - had recommended the withdrawal of Avandia in July. At the time, the British watchdog reacted only by writing to doctors advising them to "consider alternative treatments where appropriate".

But today fresh fears arose that the drug could be recalled from the market, sending Glaxo shares down 7.5p to 1254p. Analysts had hoped that the Brentford-based drugmaker's Avandia headaches were over after Glaxo took a record legal charge of £1.57 billion in July, with a significant part going to settling patients' lawsuits against Avandia.

Some feared the new findings would lead to another flood of legal claims on the diabetes drug. However, Savvas Neophytou, an analyst at Panmure Gordon, said: "GSK has taken provisions against further legal action, but in any case I don't think this development is going to flush out a lot more claims."

A spokesman for Glaxo said: "GSK has carried out an extensive research programme involving more than 50,000 patients to analyse the safety and benefits of rosiglitazone [Avandia's generic name]. No other diabetes medicine introduced in the past 10 years has such an extensive safety database."