GlaxoSmithKline is expected to unveil a £100 million slide in sales next week, led by flagging demand for Avandia, the diabetes drug which has been at the centre of a safety scare over its heart risks.

Avandia sales for the quarter are expected to fall to around £261 million, down from £378 million in the same period last year.

US regulators have agreed to allow Avandia to remain on the market but are considering changes to labelling which could further erode sales of the product.

Deutsche Bank published research earlier today warning that Avandia “could lose 90 per cent of pre-controversy sales” in the US if America’s powerful Food and Drug Administration (FDA) insists on stiffer warnings on the drug’s label.

Glaxo has been hit by a steep downturn in sales of Avandia, its second top-selling medicine, since May when a report in the New England Journal of Medicine linked it with a 43 per cent increase in the risk of heart attacks.

Since then, Glaxo has fought to shore up confidence in the product, which it claims is as safe as other drugs in the same class.

But yesterday, the European Medicines Agency said it plans to tighten labelling of the drug in Europe, another blow for the company.

Europe’s largest drugmaker is set to report group sales of £5.5 billion for the third quarter of 2007 next Wednesday, down from £5.6 billion last year, according to estmates by City analysts.

Citigroup has predicted even lower sales of £5.4 billion and also expects Glaxo to report a 9 per cent fall in pre-tax profits of £1.8 billion, down from £2 billion last year.

The third-quarter results will be the first test for Andrew Witty, Glaxo’s new chief executive officer who is set to take over from Jean-Pierre Garnier in the new year.

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