Legal claims facing GlaxoSmithKline over its diabetes drug Avandia, the company’s second-bestselling medicine, could cost the company as much as $5 billion (£2.53 billion), analysts said yesterday.

Mark Purcell, pharmaceuticals analyst at Deutsche Bank, estimated that the company could face as many as 16,000 separate American legal claims after a report in the New England Journal of Medicine this week, which claims that Avandia raised the risk of heart disease by 43 per cent. It also pointed to a 64 per cent increase in overall death from cardiovascular causes.

Mr Purcell estimated that the legal costs could reach $300,000 per case, or $4.8 billion in total. He also predicted that Glaxo could suffer a 30 per cent to 40 per cent slump in sales of Avandia. About three million people worldwide take Avandia, a treatment for type2 diabetes that generated $3 billion in sales for GlaxoSmithKline last year.

“There are thousands of potential plaintiffs out there,” Michael Monheit, a lawyer with Anapol Schwartz Weiss Cohan Seldman and Smalley, a Philadelphia-based law firm, said. “We have had about a dozen inquiries already.”

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The report was overseen by Steve Nissen, one of the first researchers to uncover a link between Merck’s Vioxx and an increased risk of heart attacks. The study by Dr Nissen’s Cleveland Clinic suggested that Avandia significantly raised the risk of death from heart attacks compared with other diabetes drugs or a placebo.

GlaxoSmithKline, which yesterday launched an over-the-counter diet pill called Alli, has raised questions about the methodology of the report and the relatively small number of “cardiovascular events” on which the findings are based. Other groups including Diabetes UK have also questioned the way the study was conducted.

The report was based on a review of 42 existing clinical studies involving nearly 28,000 patients. It has prompted the US Food and Drug Administration to issue a public safety alert, advising users to seek medical advice about potential risks.

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