European pharmaceutical giant GlaxoSmithKline PLC (NYSE: GSK) stated today that its Q3 profit dropped 5.8% on slowing sales of its Avandia product along with stiffer competition from generic versions of many of its popular products. This was to be expected, as it was mentioned in GSK's last quarterly results as a warning on future guidance. But the firm is not sitting still while some of its sales are being taken by generic competitors, that's for sure.

The world's second-largest drugmaker after U.S.-based Pfizer, Inc. (NYSE: PFE) said that it will be rolling out a $3 billion program designed to cut costs amid an expected drop in 2008's profit due to -- you guessed it -- generic competition. The company is expecting the sales decline in its Avandia diabetes drug product to continue into next year as well.

Avandia, once one of GSK's most promising products, saw sales plummet off the deep end in the latest quarter. In the U.S., the drug saw a 48% decline. The drop was partly due to safety concerns around the drug that arose this summer after a negative article in The New England Journal of Medicine affected prescriptions globally. GSK CEO Jean-Pierre Garnier said job losses will be unavoidable, but did not go into specifics. However, GSK did reaffirm its outlook for the current fiscal year, saying that EPS growth of between 8% and 10% would be expected at constant exchange rates.