It was a rather gloomy first-quarter report from GlaxoSmithKline (NYSE: GSK), considering that revenue was up 9% and adjusted earnings per share shot up 17%.

Unfortunately, most of that gain came from sales of pandemic vaccine and antiviral treatment Relenza. The swine flu is winding down and Glaxo has allowed some countries to cut orders or substituted their swine flu orders for bird flu vaccine, which some countries are stockpiling in case it pops up again. The company expects to make as much this year from pandemic vaccines as last year, but then what? One-time sales are no way to run a drug company.

Sales of the rest of Glaxo's products up were up just 4%, much lower than growth last year after taking out Relenza and pandemic vaccine. The company isn't out of the woods.

Glaxo faces an advisory panel in July that will help decide the fate of diabetes drug Avandia. Sales have dropped substantially since reports of heart problems came out a few years ago, but it's still a $1.2 billion-a-year drug. If that gets pulled off the market, it would be a big blow to the company.

But even if Avandia remains on the market, sales could be tough to come by. At least one doctor is clamoring to stop a trial comparing Avandia to Takeda's Actos because he feels the evidence already points to Avandia having worse side effects. With so many other diabetes medications available from Merck (NYSE: MRK), Amylin Pharmaceuticals (Nasdaq: AMLN), Eli Lilly (NYSE: LLY), and Novo Nordisk (NYSE: NVO), doctors may end up shunning the drug regardless of the outcome of the meeting in July.

Glaxo is also worried about the situation in Europe. With many countries having budget constraints, everything is on the table for cuts -- government-sponsored health care included. Glaxo has taken a 3% hit per year for a while and prices could fall further, given the current situation. Any gains the company gets through its push into developing countries could be eaten by lower sales in the developed countries.

Glaxo has made a lot of deals over the past few years and has a well-stocked pipeline, but none of that will matter if it can't deliver increasing -- or at least stable -- sales of its current products. Stay tuned, Fools.

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