GSK fined in China following bribery investigation

GlaxoSmithKline plc (GSK) announced on September 19, 2014, that its Chinese subsidiary, GlaxoSmithKline China Investment Co. Ltd (GSKCI), has been found guilty of offering money or property to non-government personnel for improper commercial gains, according to Chinese law. The verdict was delivered by the Changsha Intermediate People’s Court in Hunan Province.

The ruling follows an investigation initiated by China’s Ministry of Public Security in June 2013. As a consequence of the court's verdict, GSKCI will pay a fine of £297 million (approximately 3 billion RMB) to the Chinese government. The company stated the fine will be funded through existing cash resources. Associated costs and charges related to restructuring will be included in GSK’s third quarter financial update.

GSK acknowledged that the illegal activities of GSKCI were a clear breach of its governance and compliance procedures and contrary to expected values. The company has published a statement of apology to the Chinese government and its people on its website. GSK stated it has fully cooperated with the authorities and taken comprehensive steps to rectify the issues identified within GSKCI's operations.

These remedial actions include fundamentally changing incentive programs for its salesforce, decoupling sales targets from compensation, significantly reducing and altering engagement with healthcare professionals, and expanding processes for reviewing and monitoring invoicing and payments. GSK CEO Sir Andrew Witty stated that reaching a conclusion to the investigation was important, though a deeply disappointing matter. He affirmed GSK's continued commitment to China and its people, aiming to improve access to innovative medicines and vaccines.