David Prosser: A dose of sense about GSK profits

Outlook GlaxoSmithKline no doubt saw it coming, but the pharmaceuticals giant is still entitled to be annoyed by the hysterical reaction by some to its latest sales figures. Its half-year update showed, hardly surprisingly, a big increase in demand for its anti-flu drug Relenza, plus huge pre-orders for the H1N1 vaccine GSK expects to have ready this autumn.

Critics of big pharma were queuing up to accuse the company of profiteering, with several opportunistic politicians demanding an inquiry into whether the Government is overpaying for anti-swine flu drugs.

Never mind the fact that the GSK is donating doses of Relenza, as well as its vaccine, to the World Health Organisation, or that it spent billions developing these drugs over many years; the spectre of a business making a profit from this health scare was too much for some.

How do GSK's critics think new drugs – such as the meningitis vaccine for babies that GSK is about to patent – get developed in the first place? Would they prefer that the Department for Health pinched half the NHS budget to spend on developing drug treatments, so that there was no need for the private sector, with its distasteful desire for filthy lucre, to get involved?

One particularly trenchant critic of GSK was yesterday calling for a windfall tax on drugs companies that have been cashing in on the pandemic. Presumably the revenue raised would have to redistributed to those businesses likely to suffer during this health scare – the retailer Next, for example, regards swine flu as the biggest threat to its trading prospects in the second half of the year.

Let's not pretend that pharmaceutical companies are altruistic beasts motivated by anything other than profit. But the business model of any company developing drug treatments depends on it coming up with successful new lines before patents on previous products expire. GSK, for instance, actually reported a small decrease in overall sales yesterday, despite the swine flu boost, mostly because of competition from generic drugs companies that are now entitled to make the medicines it has come up with in the past.

Drugs companies around the world, including Roche, Sanofi and Baxter, have in recent days been reporting better figures due in part to orders for swine flu-related products. GSK is Britain's champion in this field and will no doubt reap the benefits too.

It won't be only shareholders who benefit. GSK plans to recall some staff earmarked for redundancy, now that more work is available. It is also one of the UK's biggest corporate taxpayers. Let's not add a mass panic about profiteering to the health scare with which we are already having to contend.