Comment: China crisis growing for troubled Glaxo

SIR Andrew Witty must have thought his clean-up campaign at GlaxoSmithKline was drawing a line under the company’s past record of bad behaviour.

Terry Murden. Picture: TSPL

Not so. The bribery claims against the firm in China are a reminder of a troubled decade during which GSK was accused by the UK and US authorities of allegedly concealing the side-effects of its antidepressant Seroxat. It also faced questions from the US Congress about its diabetes drug Avandia. The US department of justice imposed a record $3 billion fine on the company in relation to its marketing techniques.

When he was hired as chief executive in 2008, Witty was seen as untainted by all this and he has made a determined effort to settle outstanding legal claims and push for greater transparency in the company’s dealings with the medical world.

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The firm is now accused of bribing doctors and health officials in China which is pursuing a hard line against corruption. What looked at first like a local difficulty for GSK is fast turning into a full-blown crisis. Witty last week despatched three executives to China to deal with the issue and he may be forced to follow them.

China accounts for just 3 per cent of GSK’s sales, but aside from a likely multi-million pound fine and potential criminal proceedings against those individuals directly involved there is a huge risk to its reputation and growth in a massive market.

Boost for case against port

THREE weeks ago we revealed that Charles Hammond, chief executive of Forth Ports, had written to the First Minister, Alex Salmond, demanding a rethink on Babcock’s proposed container port on the Forth.

Hammond’s argument is based largely on there being no economic case for a port because the container industry is already plagued with overcapacity.

He will be cheered, then, by an interview last week with Soren Skou, chief executive of Maersk Line, a bellwether for global trade, in which he said the container shipping industry will see growth in demand fall to half the levels of the past two decades.

The decline in container traffic is a result of two key factors: a maturity in shifting containerised goods and a reversal of offshoring by European and US firms who have been repatriating more work, particularly from Asia.

Scottish Government ministers are minded to support the Rosyth plan following a seven-week inquiry last year. Transport Scotland said demand for additional capacity had been identified by the second national planning framework.

Hammond queries this, and has threatened legal action. So far, there has been no sign that ministers will change tack, but Hammond seems determined to fight this all the way.

Summertime blues in fashion

The long spell of sunshine may be putting a smile on everyone’s face but spare a thought for fashion retailers who are already turning their attention to more typical British weather.

While shoppers wilt in the heat and choose to wear as little as is decent, Marks & Spencer will this week introduce its autumn/winter range.

As far as M&S boss Marc Bolland is concerned, this is far more important than topping up his tan. His own future depends on how successful the new fashions prove to be. The range was well-received when it was showcased in May, but Bolland’s task is to turn that enthusiasm into sales.

The first quarter figures suggested that the underlying performance of the high street chain is not as bad as feared, but they were just a warm-up for what lies ahead.

As with all stores, the hot weather brings mixed fortunes. It will have brought a boost for garden centres and soft drinks suppliers, but shopping malls have been sacrificed in favour of the beach and countryside. This combined with big television audiences for major sporting events will have taken its toll on the high street. Sales at John Lewis were down almost 9 per cent year-on-year in the week to 13 July. In Glasgow, they fell by a whopping 19 per cent and with the hot weather likely to last into this week another fall is expected.

The figures were a setback for hard-pressed retailers who had seen signs of a tentative recovery after sales rose for a second consecutive month in June.

Twitter: @TerryMurden1