DRUGS company GlaxoSmithKline reported a seven per cent rise in profits over the past quarter, in what it described yesterday as a challenging period for the pharmaceuticals industry.

The group, which employs about 1,500 people at Barnard Castle, County Durham, said pre-tax profits for the three months to June 30 rose to £1.83bn, while sales were up six per cent at £5.42bn.

Sales rose nine per cent, with strong growth in the US - up 15 per cent, while sales in Europe rose one per cent.

Its Seretide/Adviar asthma drug had seen very strong performance, with sales of £416m following its launch in the US in April last year.

Chief executive Dr Jean-Pierrer Garnier said three factors made the industry a challenging one - that governments were having a difficult time paying for drugs, the fact that it is hard to discover new drugs and the threat of generic competition.

"This is not an industry for the timid. It is for people who are aggressive and determined. We need to build our enterprise for the long term," he said.

He said GSK's goal from its merger between Glaxo Wellcome and SmithKline Beecham, had been to "create the best pipeline in the industry" and Glaxo had a great opportunity to develop its drug pipeline and was more interested in that than in doing deals.