GlaxoSmithKline, Britain’s biggest drug company, warned today that it may have to change this year's earnings guidance after next week's meeting of the US Food & Drug Administration, which will discuss GSK's second best-selling drug, Avandia.

The pharmaceutical giant reported today that sales of the diabetes drug dropped 22 per cent in the three months to the end of June, following a report in May that linked the product to an increased risk of heart attacks.

Glaxo did not lower its 2007 earnings outlook but did caution that this could change depending on the outcome of a meeting of an FDA advisory committee on Avandia next week.

The company said today that sales of Avandia, GlaxoSmithKline’s were £349 million in the three months to June. In the same period last year the company reported sales of £477 million.

Demand for the product collapsed after a controversial study in the New England Journal of Medicine claimed that the drug increased the risk of heart attacks by 43 per cent.

GlaxoSmithKline has mounted a fierce defence of the product and raised questions about the methodology of the report in the New England Journal.

The drop in Avandia sales left pre-tax profits for the second-quarter of this year little changed at £1.9 billion, equivalent to earnings per share of 24 pence.

Total sales edged 2 per cent lower to £5.7 billion as GlaxoSmithKline struggled in the face of a weak dollar and growing competition from generic manufacturers of products such as Zofran, an anti-nausea drug.

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