GSK expecting financial hit from bribery probe
Source: AFP |
July 25, 2013, Thursday
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Print Edition
Print Edition
GLAXOSMITHKLINE expects its financial performance in China to take a hit from Beijing's investigation into alleged bribery by senior staff, the British pharmaceuticals company said yesterday.
"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 an earnings update. "We are cooperating fully with the Chinese authorities in this matter," he added alongside news of sliding second-quarter profits.
On Monday, GSK said that senior employees at its China unit appeared to have broken the law - after Chinese police alleged that its employees had bribed government officials, pharmaceutical industry groups, hospitals and doctors to promote drug sales.
GSK said it was taking the matter "extremely seriously" and pledged to "root out corruption."
A police official previously claimed that GSK staff funneled nearly US$500 million in 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, though he has not been formally detained.
Police allege GSK staff also took kickbacks from travel agencies in return for organizing conferences, some of which did not exist.
According to media reports, more than 20 people have been detained in the case.
Meanwhile, GSK revealed that net profits sank 15.6 percent to 1.045 billion pounds (US$1.6 billion) in the three months to June, as European governments tightened their budgets and cut expenditure. That compared with profit after tax of 1.238 billion pounds in the same period a year earlier.
"We remain cautious about the outlook in Europe and expect austerity pressures to continue," Witty said. The results also reflected GSK's decision to restructure its European operations, he added.
"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 an earnings update. "We are cooperating fully with the Chinese authorities in this matter," he added alongside news of sliding second-quarter profits.
On Monday, GSK said that senior employees at its China unit appeared to have broken the law - after Chinese police alleged that its employees had bribed government officials, pharmaceutical industry groups, hospitals and doctors to promote drug sales.
GSK said it was taking the matter "extremely seriously" and pledged to "root out corruption."
A police official previously claimed that GSK staff funneled nearly US$500 million in 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, though he has not been formally detained.
Police allege GSK staff also took kickbacks from travel agencies in return for organizing conferences, some of which did not exist.
According to media reports, more than 20 people have been detained in the case.
Meanwhile, GSK revealed that net profits sank 15.6 percent to 1.045 billion pounds (US$1.6 billion) in the three months to June, as European governments tightened their budgets and cut expenditure. That compared with profit after tax of 1.238 billion pounds in the same period a year earlier.
"We remain cautious about the outlook in Europe and expect austerity pressures to continue," Witty said. The results also reflected GSK's decision to restructure its European operations, he added.
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