Drug safety: A two-pronged attack on Avandia
“In a highly unusual coordinated announcement,” U.S. and European drug regulators sharply limited sales of Avandia, a diabetes drug that has been linked to strokes and heart attacks in patients, said Gardiner Harris in The New York Times. Sales of Avandia, made by GlaxoSmithKline, have been suspended entirely in Europe; patients in the U.S. can obtain Avandia only after providing a sworn statement that they’ve tried every other diabetes medicine and have been warned “of the drug’s substantial risks to the heart.” An estimated 47,000 Avandia users from 1999 through 2009 “needlessly suffered a heart attack, stroke, or heart failure, or died.” The company has taken a $2.3 billion charge against earnings to cover potential liability stemming from the drug’s side effects.
Only a regulatory “Catch-22” prevented the drug from being banned outright, said Shelley Dubois in CNNmoney.com. There have been few formal studies of Avandia, so the sample of patients tested is small. That leaves the FDA without enough hard data to order a ban. The agency can’t request additional studies because it would be unethical to give test subjects a drug that is known to be risky. So instead of a ban, “the FDA basically mandated everything short of putting a skull and crossbones on the label.”
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Airlines: Southwest’s ambitious acquisition
Southwest Airlines has taken “a bold step” to expand its national network and compete internationally, acquiring rival low-cost carrier AirTran for $1.4 billion, said Terry Maxon and Eric Torbenson in The Dallas Morning News. With the acquisition, “Southwest gains a valuable market presence in Atlanta” and an East Coast hub. And AirTran flies to Mexico and the Caribbean, providing Southwest with its first international routes. Last year Southwest unsuccessfully bid to buy bankrupt Frontier Airlines, losing out to Republic Airways.
Mergers: Unilever lassoes Alberto-Culver
In “its biggest purchase in a decade,” Anglo-Dutch consumer-goods giant Unilever has agreed to buy Alberto-Culver, a maker of hair-care products, for $3.7 billion, said Clementine Fletcher in Bloomberg.com. The deal advances CEO Paul Polman’s strategy of doubling Unilever’s sales by expanding personal-care and home products. Alberto-Culver, which generates 64 percent of its revenue in the U.S., also increases Unilever’s presence outside its Western European base. The purchase makes Unilever the world’s largest maker of hair-conditioning products.
Bankruptcies: Blockbuster throws in the towel
With trips to the video store increasingly rare, Blockbuster last week filed for Chapter 11 bankruptcy, marking the end of an era, said the Associated Press. The company, under new ownership led by billionaire investor Carl Icahn, was “reeling from mounting losses, rising debt, and competitors that have better catered to Americans’ evolving media habits,” such as Netflix and video on demand. Analysts expect Blockbuster to close “hundreds” of its 3,300 stores.
Departures: Geoghagen out at HSBC
Michael Geoghagen, CEO of international banking giant HSBC and a 37-year veteran of the bank, is stepping down, reportedly because the bank’s board refused to name him chairman, said Parmy Olson in Forbes.com. Known within HSBC for “his forceful and at times intimidating persona,” Geoghagen (pronounced gey-gun) is credited with stabilizing the bank during the financial crisis, reminding employees and clients that HSBC had survived previous shocks like the Argentine peso crisis. Stuart Gulliver, a 30-year veteran with the bank, has been named to replace him.
