AstraZeneca has been told by the US Food and Drug Administration that its second biggest-selling drug should not be used as a major treatment for depression.

But Seroquel, which is widely used for the treatment of schizophrenia and has annual sales of $4.5 billion (£3.1 billion), was approved as a supplementary drug for patients who get little benefit from other anti-depressants.

The market for patients with depression is far bigger than that for schizophrenia or bipolar disorders. The FDA advisory panel said it believed the side-effects of Seroquel outweighed its benefits in treating what could potentially be a market of 20 million patients in the US.

It is claimed that Seroquel causes weight gain, high blood-sugar levels and potential heart problems.

“I saw no clear advantage demonstrated in efficacy,” said FDA panel chairman Wayne Goodman. “There were side-effects, and I would expect unintended consequences associated with the wide-scale use of the drug.” Panel member Robert Harrington said he did not “think the long-term risks have been adequately characterised”. Frank Greenway, another panel member, said “This represents a second-line therapy.”

AstraZeneca said it was good news Seroquel had been approved for use as an add-on drug in treating depression. Chief medical officer Howard Hutchinson said: “We are pleased that the committee found Seroquel to be effective and acceptably safe for use as an adjunctive therapy for the treatment of major depressive disorder.”

He said the company planned to have further discussions with the FDA about using the drug in other cases. AstraZeneca is facing lawsuits from thousands of patients who claim that they developed diabetes after taking Seroquel. Weight gain is a major risk factor in diabetics.

London analysts said the ruling was a “mixed result”. AstraZeneca shares fell 5p to 2345p.