GlaxoSmithKline

What a wicked web we weave! GlaxoSmithKline, the UK drug manufacturer has come clean and admitted that yes they have been questioned regarding their possible bribing of Chinese officials and also violation of tax laws. Tut! Tut! Naughty, naughty! One might say that there is no smoke without fire and in true crisis management style, the best thing to do is make a press statement before the news is spouted about by someone else for you (your enemies will always see to it that that is done and double-quick).

GlaxoSmithKline: Bribery?

GlaxoSmithKline: Bribery?

Initial questioning was carried out by police in China and the executives that were called in from GlaxoSmithKline have admitted that they have been giving the good old financial feedbag to medical associations and hospitals as well as doctors in a bid for their drugs to be prescribed over everyone else’s, thus boosting sales and inflating prices in the process.

At the present time the executives are keeping a low profile and nothing more is known about their names or how many people have been involved in the hush-money peddling. They are simply known to have been based in Changsha (south-central China).

An official statement issued by GlaxoSmithKline today stated that they were cooperating fully with police in China in a bid to stamp out such practices that they considered to “have no place” in their company.

GlaxoSmithKline, just like many other western drug manufacturers are trying to offset falls in sales in the western world due to either the slowdown and the economic recession or the fact that they have seen the loss of patent protection for certain drugs. China is a prime market as it offers the chance for such companies to make up for losses that are being incurred and to try to boost revenue. Although, whether that will continue is now debatable given the recent predictions today that China will suffer a severe contraction in Gross Domestic Product this year, that will be beyond that of the 2008 knock-on effect of the financial crisis.

GlaxoSmithKline: Price Fixing?

GlaxoSmithKline: Price Fixing?

Only a week ago it was announced that China was investigating GlaxoSmithKline and other major drug manufactories for supposed price-fixing in China. The National Development and Reform Commission started an investigation of companies (GSK, Baxter Healthcare and Sandoz, for example). In total there are 60 domestic and foreign companies that are involved in the on-going inquiry.

Unfair-pricing practices have been set up according to the Chinese authorities in particular since the bonus of the international reputation of certain drug-companies, meaning that they are to be trusted has influenced consumption of their drugs in China. There must be something there, however, since prices were immediately reduced by some of those companies by 20%.

GlaxoSmithKline suffered a loss today on the London Stock Exchange dropping 0.43% (down £7.500 to £1, 745.500) at 11:30 ET. Although, the news had little effect on the price of shares in the US, where GSK rose by 0.94% (up $0.4922 to $52.7822).

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