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GSK says China bribery probe to hit performance
by Staff Writers
London (AFP) July 24, 2013

GlaxoSmithKline expects its performance in China to take a hit from Beijing's probe into bribery allegedly carried out by senior staff, the British drugs firm said Wednesday, and described the matter as "shameful".

"Clearly, we are likely to see some impact to our performance in China as a result of the current investigation, but it is too early to quantify the extent of this," GSK chief executive Andrew Witty said in a results statement.

"We are co-operating fully with the Chinese authorities in this matter," he added alongside news of sliding second-quarter profits for the group.

GSK had admitted on Monday that senior employees at its China unit appeared to have breached Chinese law -- after Chinese authorities alleged that employees had bribed government officials, pharmaceutical industry groups, hospitals and doctors to promote sales.

Witty, addressing reporters after publication of the results, added that the behaviour would also be investigated by the company.

"From what we understand from the authorities, it appears that certain senior managers in the Chinese business have acted outside of our processes and our controls and both defrauded the company and the Chinese healthcare system," Witty told journalists on Wednesday.

"To see these allegations made about people working for GSK is, as we have said, shameful. For me, personnally, they are deeply disappointing.

"The alleged activities are not what we expect of our people and are totally contrary to our values.

"Outside and inside the company, people rightly expect us to operate with integrity and to be crystal clear -- we have zero tolerance for this kind of behaviour.

"I can assure you we are absolutely committed to rooting out corruption and we are absolutely committed to get to the bottom of what has happened here.

"We are cooperating fully with the authorities and obviously we are looking into what has happened ourselves."

He added that the group had set up a review to investigate the matter.

"One thing I can guarantee: we will learn from this and we will make changes," he added.

"In the meantime, I would like to say that we are committed to China. We support the efforts of the Chinese government to reform the medical sector and we are open to looking at all ideas to improve affordability and access to our medicines, including changing our own business model in China."

He added that GSK believed that China remains "a key environment for further investment".

A Chinese police official has previously claimed GSK staff funnelled nearly $500 million in suspected bribes through travel agencies and consultants since 2007.

Police have held four top executives of GSK China and prevented another, the firm's British finance director, from leaving the country, although he has not been formally detained.

Police allege that GSK staff also took kickbacks from travel agencies in return for organising conferences, some of which did not exist.

According to media reports, more than 20 people have been detained in the case.

Meanwhile on Wednesday, GSK revealed that group net profits sank 15.6 percent to 1.045 billion ($1.6 billion, 1.2 billion euros) in the three months to June, as austerity-driven European governments tightened their budgets and cut expenditure.

That compared with profit after tax of 1.238 billion in the same period a year earlier.

The results also reflected GSK's decision to restructure its European operations.

Sales grew 2.0 percent to 6.618 billion in the second quarter, aided by faster-growing emerging markets.

Investors shrugged off the results and China profits warning, with GSK's share price rising 0.21 percent to 1,676 pence on London's FTSE 100 index of leading companies, which was 0.12-percent higher in late afternoon deals.


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American detained in China amid pharma probe: official
Beijing (AFP) July 23, 2013
An American has been detained in China, a US embassy official said on Tuesday, as Chinese authorities continue a probe into corruption by multinational pharmaceutical companies. Asked if a US citizen had been detained during the probe which has included charges of bribery against GlaxoSmithKline (GSK), embassy spokesman Nolan Barkhouse said: "We are aware that a US citizen has been detained ... read more

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