Sunday, July 21, 2013

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.

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.

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.

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