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GSK says CEO’s China visit flags commitment in face of graft scandal

December 2, 2013

By Ben Hirschler, Andrew Osborn and Louise Ireland

LONDON/BEIJING (Reuters) – GlaxoSmithKline’s <GSK.L> (GSK) chief executive is showing his commitment to doing business in China by joining a trade trip there, a GSK spokesman said on Monday, after allegations of illegal payments to Chinese doctors and officials.

Andrew Witty declined to comment on the investigation into alleged corruption but he told Reuters in Beijing that the British drugmaker would have something to say “quite soon”.

Witty – on his first visit to the country since the corruption scandal blew up in July – is in China as part of a 100-strong business delegation with British Prime Minister David Cameron.

“It’s an important opportunity to show our continued commitment to China and to supplying our medicines to the country,” GSK spokesman Simon Steel said in London.

Chinese police have accused GSK of funneling up to 3 billion yuan ($492 million) to travel agencies to facilitate bribes to boost its drug sales. The accusations are the most serious against a multinational in China in years.

GSK’s sales in China dived 61 percent in the third quarter after hospital staff shunned visits by its sales teams in the wake of the investigation.

Legal and industry sources told Reuters last month that police were likely to charge some of GSK’s Chinese executives but not the company itself. One person with direct knowledge of the situation said the police investigation was likely to be concluded by around early December.

GSK has said some of its senior Chinese executives appear to have broken the law. It has also said it has zero tolerance for bribery, calling the allegations in China “shameful”.

GSK sold 759 million pounds ($1.2 billion) of pharmaceuticals and vaccines in China in 2012, up 17 percent on 2011, representing about 3.5 percent of its worldwide total. ($1 = 6.0932 Chinese yuan) ($1 = 0.6105 British pounds)

(Reporting by Ben Hirschler and Andrew Osborn; Editing by Louise Ireland)