GlaxoSmithKline, the drug giant, posted a fall in sales and profits for the first quarter of the year due to a strong pound and tough generic competition in the US.

The world's second-largest pharmaceutical company saw its turnover fall 4% to £5.6bn, and its pre-tax profit dropped 1% to £2.1bn compared with the first quarter of 2006.

But at constant exchange rates, which is a better measure of the group's underlying performance, sales were up 4%, and pre-tax profit rose 10%.

The group maintained its guidance for earnings growth this year of 8 to 10% at constant exchange rates, but its shares erased gains earlier in the morning and were down 17p at £14.54 by mid-afternoon.

Peter Cartwright, an analyst at Evolution Securities, said there were no nasty surprises in the results, although some investors had expected the company to raise its guidance. But he added: "Historically, GSK have never changed their guidance in the first quarter."

Three of the group's top drugs have suffered from intense generic competition in the US, and sales have fallen accordingly. Sales in Wellbutrin XL, which acts against depression, fell 37% to £109m, Zofran, for nausea, fell 60% to £87m, and Flonase, a hay fever remedy, dropped 49% to £63m.

But the company said its two best-selling drugs - Advair for asthma and Avandia for type 2 diabetes - performed well. Total sales of Advair, or Seretide as it is known in Europe, were up 11% to £835m, and sales of Avandia grew 19% to £414m.

There has been some concern over slowing growth for the two drugs, particularly where US prescriptions are concerned. But David Stout, president of pharmaceutical operations at GSK, said the company had recently seen underlying prescription growth for both drugs.

GSK has had over 10 products filed, approved or launched since the start of the year. Tykerb, the group's breast cancer treatment, was approved by the US Food and Drug Administration last month, and Cervarix, its potential blockbuster vaccine for cervical cancer, was filed for approval around the same time.

Mr Stout said the company was open to acquisitions and further in-licensing to strengthen its pipeline of products.

Meanwhile, Shire, the FTSE 100 biopharmaceutical company best known for its attention deficit hyperactivity disorder franchise, posted strong first quarter results, with a 29% rise in sales to $528m and a net profit of $112.7m compared with $61.1m at the same time last year.

The group also upgraded its guidance for 2007, and said sales growth for the year was expected to be in the low 20s range, compared with the previous guidance of around 20%.

Shares in the group were up 52p at £11.56 in mid-afternoon trading.

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