Bribery scandal slashes GlaxoSmithKline's Chinese drug sales
LONDON, Oct 23 (Reuters) - GlaxoSmithKline's drug sales in China tumbled 61 percent in the third quarter, hit by a bribery scandal that has damaged its ability to market medicines in the country.
Worldwide, GSK's sales were flat at 6.51 billion pounds ($10.6 billion), generating core earnings per share (EPS) of 28.9 pence, 10 percent higher than a year ago.
Analysts, on average, had forecast sales of 6.65 billion pounds and core EPS, which excludes certain items, of 27.2p, according to Thomson Reuters.
Britain's biggest drugmaker reiterated on Wednesday that it expected sales growth for the year to be around 1 percent in local currency terms, with EPS rising by between 3 and 4 percent.
GSK's reputation has been tarnished and its management team in China left in disarray by Chinese police allegations in July that it funnelled up to 3 billion yuan ($490 million) to travel agencies to facilitate bribes to doctors and officials.
Industry insiders and analysts had been expecting that the police probe - one of Beijing's biggest into a foreign company - would dent sales significantly in the three months to September.
Other multinational drug companies are also being investigated but GSK has suffered the most damage from the scandal and many Chinese doctors have shunned its sales representatives.
Swiss rivals Roche and Novartis, by contrast, both saw continued growth in their Chinese drug sales in the third quarter.
Although China accounted for only 3.6 percent of GSK's global drug sales last year, the company sees it as an important source of future revenue and has been investing heavily in the country. Before the scandal, GSK's China sales rose 14 percent year-on-year in the three months to end-June.
Emerging markets are an important plank of Chief Executive Andrew Witty's growth strategy as he grapples with slower uptake of GSK's products in the developed world.
GSK has recently seen some encouraging progress with its pipeline of new drugs - including approvals this year for new treatments for lung disease, cancer and HIV - but austerity pressures in Europe remain a drag on sales and profits.