GlaxoSmithKline's China sales slump in wake of scandal
Britain's biggest pharmaceuticals company, GlaxoSmithKline, saw its drug sales in China crash by 61 per cent in the three months after its massive bribery scandal in the country.
The plunge, which was far worse than the City had expected, was described by Deutsche Bank analysts as "dire".
The GSK chief executive Sir Andrew Witty blamed "the media in China and the commentary in China" for "creating an anxiety which has led to some disruption in the business".
Chinese officials claimed in July that GSK funnelled up to 3bn yuan (£303m) to facilitate bribes to doctors and officials. Before the scandal, GSK's China sales had been up 14 per cent.
But Sir Andrew said GSK had no plans to quit China, where it has 7,000 staff.
"Even with this decline in sales, [China] is still a multi-hundreds-of-millions-pound business," he said. "We're the most integrated pharma company in China, starting from molecule discovery in Shanghai going through every step of the value chain through to sales and distribution. It's a very important business for GSK, China is a crucially important country and... we are working with Chinese authorities to engage in rebuilding trust with the people of China."
The pharmaceuticals boss added it was "too early" to take a charge anticipating a fine for the bribery allegations, and warned other foreign drug makers would be hit too. "We're not the only company to have seen a slowdown of sales in China," he said.
But the City was unimpressed: Jeffrey Holford, an analyst at Jefferies, said: "China looks worse than expected."
Overall, GSK's sales were flat at £6.51bn in the third quarter, while operating profit rose 11 per cent to £2.1bn.
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