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LONDON (Reuters) - GlaxoSmithKline Plc expects to get two withdrawn drugs back on the U.S. market in the middle of this year after signing a legal agreement with regulators over a problem plant in Puerto Rico.

Europe's biggest drugmaker said on Thursday the early return of Paxil CR and Avandamet, two key products made at the plant, should keep earnings on track to grow at a low double-digit percentage rate at constant currencies in 2005.

News that the problems in Puerto Rico were close to resolution lifted GSK's stock more than 3 percent.

The so-called consent decree signed with the U.S. Food and Drug Administration (FDA) provides for an independent expert review of processes at the Cidra site to ensure good manufacturing practices.

No fine has been imposed on the company, although there is the potential for future penalties of up to $10 million a year.

News of the consent decree and the early return of the two drugs came as a relief to investors, who had feared problems at Cidra could jeopardize future earnings. There had also been talk of a large fine, with some experts suggesting a penalty of more than $1 billion.

"Most people were expecting this issue to drag on for the rest of the year. It's going to lift the stock and I think we can refocus on the (new drug) pipeline on the back of this, which is where we want to be with Glaxo," said Navid Malik, an analyst at Collins Stewart.

Shares in GSK jumped 3.4 percent to 12.83 pounds by 4:35 a.m. EDT, the biggest rise on the FTSE-100 index of blue-chip UK companies. The stock had fallen from 13.50 in early March to a low of under 12.00 as a result of the manufacturing problems.

AWAITING Q1 RESULTS

U.S. regulators seized supplies of controlled-release depression medicine Paxil CR and combination diabetes drug Avandamet on March 4 because of quality problems.

The setback came at a bad time for GSK, which was just emerging from a lengthy period of underperformance amid growing confidence in its pipeline of experimental drugs, including promising treatments for cancer and other serious conditions.    Continued ...

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