When will companies learn that it is cheaper to do the right thing that get slapped for doing the wrong thing?
Bnet has more:
GlaxoSmithKline (GSK)’s $3.4 billion legal charge on the diabetes drug Avandia probably isn’t the last of the costs the company will record against this drug. That means Avandia will probably be a loss maker for GSK, proving that former CEO Jean-Pierre Garnier’s 1999 failure to follow up on worries about heart attack deaths associated with Avandia was a strategic disaster for the company, costing it billions in actual dollars and billions more in lost-opportunity dollars.
When the dust has settled, GSK would probably have been better off stashing its development and marketing costs in a savings account rather than spending them on Avandia, some back-of-the-envelope math reveals.
Picking through GSK’s disclosures, two things emerge:
- The charges aren’t over yet even though GSK suggested in previous statements that the “substantial majority” of its Avandia problems were dealt with.
- When all is said and done, GSK will probably have lost money on Avandia even though it earned more than $16.3 billion in revenues during its lifetime.