GSK staff ‘appear’ to have breached Chinese laws

DRUGS giant GlaxoSmithKline (GSK) today admitted that some of its staff “appear” to have broken Chinese laws as allegations of bribery threaten to overshadow tomorrow’s second-quarter trading update.

Sir Andrew Witty will present an update on GSK today. Picture: Colin Hattersley

Abbas Hussain, head of GSK’s emerging markets business, met officials from the Chinese ministry of public security over the weekend.

He said: “Certain senior executives of GSK China, who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law.

Sign up to our daily newsletter

The i newsletter cut through the noise

“We have zero tolerance for any behaviour of this nature.”

Hussain added that the price of GSK’s medicines sold in China would drop as a result of changes to its “operational model”.

The UK pharmaceuticals firm was last week accused of corruption and “sexual bribery”.

The Beijing authorities have banned Steve Nechelput – GSK’s head of finance in the country – from leaving and four Chinese employees have been arrested.

GSK chief executive Sir Andrew Witty will present a trading statement and may give an update on the independent inquiry that he has asked accountancy firm Ernst & Young to launch.

Graham Parry, an analyst at Bank of America Merrill Lynch, said the Chinese allegations would be one of the “key topics” during the results update. But he added: “Our initial view is that the financial impact is likely to be limited.”

Meanwhile, rival UK drugs firm, AstraZeneca, said its office in Shanghai had been visited by police though a spokeswoman said it appeared to be a local matter related to a sales representative and not connected to any other investigations.

Astra stressed that it adhered to high ethical standards and did not tolerate illegal conduct.