Glaxo Unloads U.S. Wellbutrin Rights for $510M

Updated from 1:16 p.m. EDT GlaxoSmithKline(GSK Quote) announced Wednesday that it was selling the U.S. rights to Wellbutrin to a unit of Canada's Biovail Corp.(BVF Quote) for $510 million as first-quarter sales of the drug have dropped 70% over last year.

Glaxo has agreed to divest full commercial rights in the U.S. to Biovail International Laboratories in what the U.K. firm called "one of a series of actions" the company is taking to reshape its U.S. business and product portfolio.

Wellbutrin XL, a drug approved to treat major depressive disorder and seasonal affective disorder, began facing generic competition at the end of 2006 with a version made by Teva Pharmaceuticals(TEVA Quote).

Glaxo said sales of the drug for the first quarter of fiscal 2009 were about $67.7 million, down 70% from the same period a year ago. It expects a pretax gain of $511.8 million as a result of this divestment.

Biovail, which reported quarterly earnings Wednesday, made the news a little more than a year ago, when the U.S. Securities and Exchange Commission complained that the company falsely attributed its failure to meet its earnings guidance for the third quarter of 2003 to a truck accident involving a shipment of Wellbutrin XL. At the time, Biovail said the accident cost the company $10 million to $20 million in revenue for that particular quarter.

However, an investigation by TheStreet.com's Adam Feuerstein found that the loss was closer to $2 million to $4 million.

Shares of Glaxo, among the top five drugmakers by total revenue along with Johnson & Johnson(JNJ Quote), Pfizer(PFE Quote) and Novartis(NVS Quote), ended Wednesday trading up 1.6% to $31.05.