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

GlaxoSmithKline is divesting its U.S. rights to Wellbutrin, sales of which have slipped 70%, as part of its strategy to reshape its U.S. business.
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Updated from 1:16 p.m. EDTGlaxoSmithKline (GSK) - Get Report announced Wednesday that it was selling the U.S. rights to Wellbutrin to a unit of Canada's Biovail Corp. (BVF) 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) - Get Report

.

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) - Get Report

,

Pfizer

(PFE) - Get Report

and

Novartis

(NVS) - Get Report

, ended Wednesday trading up 1.6% to $31.05.