Marc Le Menestrel
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GSK and the Chinese Bribery Case

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by Marc Le Menestrel (26/11/2014)

GSK in its own words

GSK is a science-led global healthcare company with a mission: we want to help people to do more, feel better, live longer.

The vaccines, medicines and consumer healthcare products that we research and develop can improve people’s health and well-being, ultimately helping them to live life to its fullest and contribute to the prosperity of their communities.

We ask each of our 99,000 employees across the 115 countries to share our mission and consider how what they do can help all those people who rely on the products we make. It is why every day our scientists search for new ways to improve the treatment of diseases and illnesses. And it is why we have been pioneering new solutions that allow us to make our products available to those who need them, wherever in the world they live and whatever their ability to pay.

We are a business, so we need to do this in a sustainable way. But in doing this well, we deliver a profitable and sustainable performance. This in turn allows us to generate value and returns for our shareholders, while maintaining the substantial investment we make into the research and discovery, manufacturing, supply and distribution of our products that ultimately delivers value to patients and society.

The Chinese bribery case by GSK in its own words:

On September 19, 2014, GSK announced that the Changsha Intermediate People’s Court in Hunan Province, China ruled that GSK China Investment Co. Ltd (GSKCI) has, according to Chinese law, offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel. The verdict follows investigations initiated by China’s Ministry of Public Security in June 2013.

As a result of the Court’s verdict, GSKCI will pay a fine of £297 million (3 billion RMB at a currency exchage rate of 10.0980) to the Chinese government. This will be funded through existing cash resources. Associated costs and charges related to restructuring will be included in GSK’s third quarter update.

The illegal activities of GSKCI are a clear breach of GSK’s governance and compliance procedures; and are wholly contrary to the values and standards expected from GSK employees. GSK has published a statement of apology to the Chinese government and its people on its website (www.gsk-china.com).

GSK has co-operated fully with the authorities and has taken steps to comprehensively rectify the issues identified at the operations of GSKCI. This includes fundamentally changing the incentive program for its salesforces (decoupling sales targets from compensation); significantly reducing and changing engagement activities with healthcare professionals; and expanding processes for review and monitoring of invoicing and payments.

GSK Chief Executive Officer, Sir Andrew Witty said: "Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people. We will continue to expand access to innovative medicines and vaccines to improve their health and well-being. We will also continue to invest directly in the country to support the government’s health care reform agenda and long-term plans for economic growth."

Question for preparation:

What would you like to learn about the Chinese bribery case of GSK?

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