PHARMACEUTICAL products produced in the North-East helped industry giant GlaxoSmithKline (GSK) beat forecasts with profits of more than £2bn in three months.

The results for the quarter to September 30, released yesterday,

come as hopes are high that GSK will choose its manufacturing plant in Barnard Castle, County Durham, for a new biopharmaceutical plant, potentially creating hundreds of jobs.

The plant presently employs around 1,000 workers making drugs and skin creams.

Yesterday GSK revealed operating profits of almost £2.2bn for the quarter.

Although sales of respiratory drugs fell two per cent overall in the period to £1.7bn, sales of Avamys/Veramyst which is produced at Barnard Castle, rose 23 per cent to £50m.

In addition sales of GSK's dermatology products, many of which are produced at the County Durham facility following the acquisition of US skin specialist Stiefel for £2.5bn in April 2009, grew by 4 per cent to £283m in the three month period.

In March, GSK said it was to nearly double the amount of creams and ointments produced at the factory, following last year's announcement that it was developing a manufacturing centre of excellence for the products at Barnard Castle.

GSK's overall revenues rose by 3per cent to £7.1bn in the three months to September 30, driven by a surge in cervical cancer vaccine Cervarix, especially in Japan, while Sensodyne revenues soared 23per cent on the back of its new repair & protect toothpaste.

Chief executive Andrew Witty said as the company develops its drugs pipeline - with treatments for Parkinson's Disease, Hepatitis C and Asthma set to launch - sales should accelerate in 2012.

GSK, the UK's largest drug group, has nine treatments in late stage trials that are due to complete before the end of 2012 covering respiratory diseases, oncology, diabetes and HIV.

Mr Witty added that healthcare reform in the US and price cuts in Europe will lop £325 million off revenues this year with the possibility of more measures to reduce prices to come.

Even so, he expects the group's underlying margins to start to improve gradually from 2012.

The group is also pushing ahead with the sale of some of its non-core consumer businesses, he added, with bids to be in by the end of the year.

At the end of last year, GSK said it was planning a £500m investment in manufacturing after the Government confirmed it would go ahead with "patent box" tax reforms, which give firms a ten per cent reduction in corporation tax on profits from a patent that has been registered, and then manufactured, in the UK.

The facility in Barnard Castle, County Durham, is competing with three rival sites to become the location for a new biopharmaceutical plant where ground-breaking drugs to tackle specific illnesses will be produced.

The other sites under consideration are at Irvine and Montrose, in Scotland, and Ulverston, in Cumbria and a final decision is expected early next year.