Analysts at Citigroup suggested that GlaxoSmithKline's sales in China may have dropped as much as 30 percent in volume terms since June following allegations against the company of corruption in the country. The drugmaker said it is "seeing some impact to the business as a result of the ongoing investigation."
GlaxoSmithKline, which last year generated around 3.6 percent of its global drug sales in China, indicated that it will provide an update on the impact when it releases third-quarter results in October. The company added "in the meantime, we are co-operating fully with the authorities and are committed to working with them to achieve an appropriate resolution."
Four executives from GlaxoSmithKline were recently detained by Chinese police as part of an investigation into bribery in the pharmaceutical sector. The drugmaker has acknowledged that some of its employees may have violated the law after police accused it of funneling up to 3 billion yuan ($490 million) to travel agencies to facilitate bribes to doctors to increase sales of its medicines.
Andrew Baum of Citigroup said indications from his latest research pointed to an absolute drop in revenues in China as a result of pharmaceutical companies "suspending activities" and "hospitals that are wary" of talking to drugmakers. Baum noted that GlaxoSmithKline is expected to suffer the most, although he cautioned that other companies would also report absolute sales declines in China of 10 percent to 20 percent.
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