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September 23, 2013

GSK China sales may take 30% hit due to bribery scandal

Analysts have estimated that GlaxoSmithKline's (GSK) sales in China may be down by around 30% since it was accused of bribery and corruption by Chinese authorities.

By Heidi Vella

GSK

Analysts have estimated that GlaxoSmithKline’s (GSK) sales in China may be down by around 30% since it was accused of bribery and corruption by Chinese authorities.

The fall in sales could affect the company’s ability to market medicines in the country.

Citigroup has suggested that sales of some multinational drug companies were down by as much as 30%, or more in volume terms since June, reported Reuters.

According to the news agency, industry insiders said GSK, which has had four senior staff members detained by Chinese authorities since the bribery allegations began, had suffered more damage than its peers with many Chinese doctors refusing to see sales staff and promotional activities being curtailed.

Britain’s biggest drug maker has so far refused to detail the impact of the scandal on its business. However, a spokesperson admitted the company was seeing ‘some impact’, according to Reuters, as a result of the ongoing investigation against it.

"Throughout the allegations, GSK has maintained it will cooperate with authorities in China."

Throughout the allegations, GSK has maintained it will cooperate with authorities in China and admitted that some of its senior Chinese executives appeared to have broken the law.

In July, GSK was accused of funnelling up to CYN3bn ($490m) through travel agencies to facilitate bribes to doctors in order to boost medicine sales.

Last year, the company made 3.6% of its global drug sales in China. Despite this modest figure, GSK sees the country as an important source of future revenue for the company.

Citigroup has said that multinational drug makers might need to review current sales models that tend to reply heavily on expanding large sales forces.


Photo: GSK’s headquarters in the UK. Image: courtesy of Maxwell Hamilton.

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