GlaxoSmithKline (NYSE:GSK), the Middlesex, England-based pharmaceutical giant, blamed sharpening competition from generic manufacturers for lower sales of its depression medications Paxil and Welbutrin after its third-quarter earnings came in lower by 3.4% to $2.25 billion. Total constant currency sales slipped to $7.7 billion in the current quarter from $8.5 billion last year. Glaxo also stated that its bottom line was hit badly by foreign exchange trading.

Between the two depression drugs it has lost $2.2 billion in revenues to the generic companies in the first nine months of this year, a 51% decline for Paxil and 30% for Welbutrin. As such, the results that Glaxo posted have to be taken in context, and they're fairly strong. In the past year Glaxo has enjoyed strong growth of Advair, which treats asthma, as well as erectile dysfunction drug Levitra. (Does that name sound like a Harry Potter spell to anyone else?)

Consequent to the company's earnings report, Glaxo and Human Genome Sciences (NASDAQ:HGSI) announced that Glaxo has reserved the right to develop and market Human Genome's diabetes drug Albugon. Glaxo will pay some up-front fees and may pay as much as $183 million if all milestones are met. The drug has yet to go into clinical trials but is being developed to treat what is known as Type 2, or adult-onset, diabetes. This once again shows how the pharmaceutical/biotechnology company symbiosis seems to be developing: The biotechnology companies serve as external drug and therapy development organizations, which then depend upon the financial power and infrastructure of the drug companies to help them get their treatments to market.

Finally, a European judge today approved the right of Glaxo and other European drug companies to place restrictions on how much of a drug they provide to any one country to limit the impact of re-importation. In this case, Glaxo argues that drug wholesalers in Greece were making enormous profits by buying Glaxo products destined for the Greek market that were then repackaged and sold more cheaply in other European countries. To stem the practice, in 2000 Glaxo began limiting the amount of any one drug that it shipped to Greece. Some believe that such a finding may strengthen the case of American drug makers such as Pfizer (NYSE:PFE) and Eli Lilly (NYSE:LLY) that are concerned about the re-importation of drugs from Canada.

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Bill Mann owns none of the companies mentioned here. The major drug companies tend to have excellent dividends and are thus prime targets for Mathew Emmert's dividend paying newsletter, Motley Fool Income Investor. Afree trialis yours for the asking.