SINGAPORE (AP) – The chief executive of GlaxoSmithKline, the world’s second-largest drug maker by revenue, said the global economy could remain sluggish for some time as tight credit markets and cautious corporate investment hamper growth.

Andrew Witty, Glaxo’s CEO, said banks remain leery of lending and companies are still “risk averse” as the impact of a credit crisis that began in the U.S. sub-prime mortgage sector in 2007 undermines investment.

“I still see significant economic contraction,” Witty said Tuesday at a news conference in Singapore, where Glaxo was opening a vaccine plant. “We’re working on the basis that this could be a relatively anemic economic backdrop for a while.” Stock markets have surged around the world since early March on expectations the worst of the global downturn is over.

“I’m not yet confident that anything is very different today than it was three months ago,” Witty said. “I think we’re still seeing an environment very similar to the one we saw in the second half of last year.”

Whitty said the company’s over-the-counter sales have been “very robust” in Asia over the last 18 months while the U.S. was “not too bad” and Europe was “the one area we’ve suffered the most.”

Glaxo’s prescription business, meanwhile, has been “a little bit soft” in the U.S, Witty said.

“There was a tremendous impact on credit markets, tremendous impact on risk,” Witty said. “Economic cycles take months or years, not weeks.”

Glaxo said in April its first quarter profit fell 13 percent on weak U.S. pharmaceutical sales.

The 600 million Singapore dollar ($412 million) factory will produce vaccines by 2011 for ailments such as meningitis, bacteraemic pneumonia and middle ear infections, Witty said. Glaxo has about 25 percent of the global vaccine market, he said.

Date: June 8, 2009
Source: Associated Press