GLAXOSMITHKLINE reassured investors with better than expected quarterly earnings yesterday but the sugary coating on profits could not disguise the after-taste of weaker second-quarter sales.

The drugs multinational celebrated £1 billion in revenues from Seretide, an asthma drug, in the first half. Jean-Pierre Garnier, chief executive, pointed to a rise of 9per cent in earnings in the second quarter and promised as good or better for the full year, regardless of generic competition to Paxil, its antidepressant.

Seretide is the company’s best seller, with 19 million prescriptions for the US version, but GSK’s American sales were up only 2 per cent in the second quarter, compared with a gain of 12 per cent in the first three months. Worldwide sales were up 3 per cent in the three months to June, in local currencies, but after translation into sterling GSK suffered a 1 per cent decline in revenue to £5.37 billion.

The company is shrugging off the second-quarter slowdown, saying it merely reflects wholesaler restocking in the first quarter. But GSK and the other pharmaceutical groups face a bigger threat from rising concern among US voters about the high price of prescription drugs.

The House of Representatives votes today on a Bill that would legalise the importation of low-cost drugs from Canada. America is one of the few countries that does not control the price of drugs and it is those sales that support GSK’s 35 per cent profit margin.

Dr Garnier said that if the Bill became law it would have dramatic consequences. “If you go to Canada, you can buy medicines for 45 per cent less. It would lead to a steep price reduction in the US,” he said.

The Food and Drug Administration, jealously guarding its regulatory powers, argues that it would lead to unsafe medicines entering the country, although no one has claimed injury from Canadian drugs.

Investors have been worried about GSK’s research pipeline but the company has big hopes for two new drugs. Levitra, a treatment for impotence, is already on sale in Europe, while Wellbutrin, an antidepressant, is expected to be approved by US authorities in September.

Pre-tax profits growth of 13 per cent in the first quarter, to £1.9 billion, was helped by a gain of 1.6 percentage points in the trading margin.

Dr Garnier said GSK was beating down costs, buying the basic molecules for its medicines from low-cost suppliers.

It is paying a second interim dividend of 9p a share.