Drug giants GlaxoSmithKline (GSK), which has an outsourced development agreement with Tata Consultancy Services in India, reported a fall in operating profit to £2 billion. The pharmaceutical company is believed to be suffering due to falling sales of its diabetes drug Avandia.

Signed last March, the multi-year, multi-million dollar deal with Tata sees the Indian company, which recently acquired Jaguar cars, but also operates in IT, e-learning and manufactures Tetley tea, provides clinical data management and clinical submissions services. The deal was struck by GSK in an effort to increase efficiency and capacity.

GSK, which announced its first quarter results for 2008 today said operating profits fell because of higher spending on research and price competition. Pharmaceutical sales for the company fell by four per cent to £4.8bn.

The well known GSK consumer brands such as drinks Horlicks, Lucozade and Ribena increased sales by eight per cent to £893 million. Group revenue for GSK rose by two per cent to £5.69bn. Vaccine sales were also up.

In October 2007 GSK announced an Operational Excellence programme which is tasked with improving effectiveness and productivity.

Related stories:

GlaxoSmithKline outsources R&D