The merger of Glaxo Wellcome and SmithKline Beecham now looks set to be delayed until the end of the year.

US competition watchdogs have raised concerns about the impact of the merger on competition in the market for anti-smoking products.

The Federal Trade Commission (FTC) has demanded more information on their nicotine-replacement products and anti-smoking drugs.

SmithKline Beecham owns the leading over-the-counter brands Nicorette and NicoDerm, while Glaxo produces Zyban, the only approved prescription drug for helping smokers quit.

The firms were due to have completed the merger, which will create the world's largest drugs firm by market capitalisation, on 25 September.

Still confident

"We remain totally committed to the merger and are confident that it will be successfully completed," said Glaxo's chairman Sir Richard Sykes and SmithKline's chief executive Jean-Pierre Garnier in a joint statement on Monday.

City analysts supported the executives' confidence.

"There will be negative market sentiment, but the merger is very unlikely to fall apart," said Mark Purcell of Donaldson Lufkin and Jenrette.

While the European Commission cleared the deal in May, this is second time the FTC has voiced its fears about the impact the merger will have on competition.

The merger was delayed in July after the FTC urged SmithKline to sell its anti-viral drugs Famvir and Vectavir and anti-nausea cancer medication Kytril.

Sale agreements

Agreements on the sale of these drugs have been reached, the drugs giants said on Monday.

"The companies continue to work with the FTC towards the resolution of minor remaining issues and expect these to be resolved satisfactorily along with the FTC's recent request concerning smoking cessation," the firms' joint statement said.

The merger, which was approved by shareholders in July, will give Sir Richard Sykes chairmanship of the new firm, with Jean-Pierre Garnier taking the post of chief executive.

An attempt in 1998 to link the companies floundered after a dispute about leadership of the merged firm.

Glaxo Wellcome shares, weak in early trading, recovered to close 10p lower at 1910p on Monday. Smithkline Beecham closed 12p lower at 863.5p.