British pharmaceutical major GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK)’s pharma and vaccine sales in China plummeted 61% during the third quarter. Sales of its consumer healthcare products in Asia’s largest economy also sank 29%. The pharmaceutical giant was hit hard by the bribery scandal. GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) has seen its sales going to rivals in the country. Though China generates only 3.5% of its revenues, the country offers vast growth opportunities.
GlaxoSmithKline sent bribe money through travel agencies
Chinese police alleged in July that the British pharmaceutical giant bribed doctors, officials and hospitals to prescribe its drugs. China alleged that GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) funneled about 3 billion yuan ($490 million) through travel agencies to bribe officials in the country, tarnishing GSK’s reputation. Industry insiders had been expecting that the probe would hamper its sales during the quarter ending September 30.
After the allegations, GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) CEO Andrew Witty sent the company’s chief of emerging markets to China. Some company officials are likely to have acted outside the company’s standard process to defraud the Chinese healthcare system. Chinese officials are also investigating other pharmaceutical MNCs.
GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) stated that it will continue to cooperate with investigators. The company thinks it is still too early to estimate the long-term impact of the scandal on its China sales. Doctors have been avoiding its sales representatives since the issue emerged, reports Reuters.
GlaxoSmithKline EPS beats consensus
The pharmaceutical major reported flat sales for the third quarter. Though sales in the U.S., Europe and Japan jumped, they were offset by poor performance in China. GSK reported Q3 revenues of £6.51 billion ($10.5 billion), slightly below the consensus estimate of £6.65 billion. Excluding one-time items, its earnings stood at 28.9 pence, beating the Wall Street consensus of 27.2 pence.
GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) also announced an interim dividend of 19 pence, up 6% compared to the same period a year ago. The company aims to buy back £1 billion to £2 billion shares in 2013. The company reiterated its full-year EPS growth estimate of 3% to 4% and revenue growth of 1%.
American shares of GlaxoSmithKline Plc (NYSE:GSK) (LON:GSK) fell 1.95% to $50.74 at 9:55 AM EDT.