While the number of employees was not shared by the source of this report, its believed to be in double digits as the company investigates China’s bribery claims. The company has also increased the monitoring of employee expense claims in order to ferret out the offenders. The company has over 7,000 people working in the Middle Kingdom.
GlaxoSmithKline china probe
In a statement today, GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) stated that it monitors employees expenses all over the world but has chosen to intensify the scrutiny in China since the Chinese launched a recent probe of Glaxo. “Where we have found potential issues, we are thoroughly reviewing them and have withheld incentive payments where appropriate,” the statement said.
The Chinese allege that through a combination of travel agencies, GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) employees have held fake conferences and have distributed nearly $500 million to doctors, government officials and hospital administrators since 2007 using improper transfers from travel agencies. The company has admitted that some executives are probably guilty and has said repeatedly that it will cooperate with the government investigation.
While China only represents 2% of total revenues for GlaxoSmithKline plc (NYSE:GSK) (LON:GSK), the company has seen significant growth in the country over the last three years. While third quarter sales fell a whopping 61% year-over-year, the fourth quarter rebounded with an increase of 17% to $1.26 billion year-over-year.
Less than a year into his ascension to the head of Glaxo’s China operations, Herve Gisserot will now have to sort through some dirty laundry left by former chief Mark Reilly.
The end of the junket
Big Pharma’s problems are not limited to China with governments and regulators in numerous countries cracking down on bribery. At the end of last year, GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) announced that it would cease payments to doctors who attend medical meetings in say, Bora Bora. Rarely, are these meetings where speakers are paid held in Haiti or a country that ends in “stan.”
Just two years ago, GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) reached a settlement with the U.S. Department of Justice for $3 billion after pleading guilty to the illegal promotion of drugs and the withholding of drug safety data. With this settlement and admission of guilt, Glaxo also agreed to end the practice of paying salespeople based on the amount of prescriptions doctors write.