Police Say Sexual Favors Spur $1.5 Billion Glaxo China Sales

Source:? Bloomberg

GlaxoSmithKline Plc?s (GSK) sales in China jumped 20 percent to about 1 billion pounds ($1.5 billion) last year, almost quadruple the pace of growth across its emerging markets. Police say bribes and sexual favors spurred the gain.

The drugmaker now faces allegations of economic crimes involving 3 billion yuan ($489 million) of spurious travel and meeting expenses, and trade in sexual favors, the Public Security Ministry said yesterday. The allegations are ?shameful? and would be a breach of the company?s systems and values, Glaxo said in a statement.

Prior to a police probe that began last month, Glaxo embarked on a strategy that tripled its Chinese sales force to more than 4,000 people in three years as the U.K.?s largest drugmaker sought a bigger share of the market. As that expansion was ramping up, Chief Executive Officer Andrew Witty told analysts on a February 2010 conference call that controlling Glaxo?s operations in China was ?not a trivial proposition.?

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