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GSK's China sales topple on bribery scandal

Wednesday, 23 Oct 2013 | 7:38 AM ET
A GlaxoSmithKline Plc logo sits on a sign outside the company's headquarters in London, U.K.
Simon Dawson | Bloomberg | Getty Images
A GlaxoSmithKline Plc logo sits on a sign outside the company's headquarters in London, U.K.

GlaxoSmithKline's pharmaceutical and vaccine sales to China tumbled 61 percent in the third quarter, as the drugmaker was hit by an ongoing bribery investigation in the country.

The FTSE 100-listed company posted flat pharmaceutical and vaccines sales overall, with increases in the U.S., Europe and Japan offset by sharply weaker sales in China, where the company is accused of bribing doctors and officials with up to 3 billion yuan ($490 million).

(Read more: US prosecutors add China bribery allegations to GSK probe)

"We continue to co-operate with the authorities and we remain fully committed to supplying our products to patients in the country. At this stage, it is it is still too early for us to quantify the longer-term impact of the investigation on our performance in China," Glaxo said when it reported results at 12 p.m. London time.

The company posted a rise in earnings per share to 28.9 pence, narrowly beating consensus estimates of 27.2 pence. Overall, sales came in flat at £6.51 billion ($10.5 billion), below the £6.65 billion forecast.

The company confirmed its full-year 2013 guidance for earnings growth of 3-4 percent and sales growth of around 1 percent.

Glaxo's weak China sales contrast poorly with those of its European rivals, Roche and Novartis, which both reported strong third quarter performances in the region this month.

(Read more: Novartis lifts guidance for second quarter in row)

Novartis pipeline faces tough competition
Andrew Weiss, head of pharma and biotech research at Vontobel, says most products in Novartis' pipeline will face tough competition and incur large marketing costs.

However, like other makers of patented drugs, Glaxo has benefited from waning fears of competition from generic alternatives to its flagship drugs.

In particular, Teva, the world's biggest generic drugs manufacturer, has hinted that replica versions of Advair — the asthma drug that represents around 25 percent of Glaxo's profits —may not be available until 2018 or later.

Sentiment towards the drugmaker was also boosted earlier this month when Glaxo confirmed it will seek regulatory approval for a malaria vaccine in 2014, meaning the drug could become available within two years.

Following its results, Glaxo shares traded 0.91 percent lower, paring some of the day's earlier losses. The stock outperformed the FTSE 100, which traded 0.61 percent down on the day.

Track GlaxoSmithKline shares live here

—By CNBC's Katy Barnato. Follow CNBC on Twitter: @CNBCWorld

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