Glaxo chief regrets 'shameful allegations'

GlaxoSmithKline chief executive Andrew Witty said the accusations of bribery and corruption against the drug maker in China were "deeply disappointing."

GlaxoSmithKline chief executive Andrew Witty said the accusations of bribery and corruption against the drug maker in China were "deeply disappointing."

However, he said Glaxo's headquarters in London had not been aware of any fraud and the executives under scrutiny in China were working "outside of our system of controls".

Mr Witty's remarks, in a conference call on Glaxo's second-quarter earnings, were his most extensive about the scandal in China, where authorities have accused executives of using travel agencies to funnel illegal payments to doctors and government officials. "I am very personally disappointed with these allegations that have been made," he said. "Clearly they are shameful allegations if they are true."

He revealed few new details about the investigation, but said Glaxo was working with the Chinese government and it had "opened up channels" with the British and US governments.

Glaxo disclosed in 2010 that the US was investigating it over possible violations of its laws against bribery overseas.

Mr Witty said the China investigation was likely to affect sales there but it was too early to know the specifics. "We continue to see the country as a key place for further investment," he said.

Glaxo announced second-quarter net income of £1.05 billion ($1.75 billion), down from £1.24 billion in the quarter a year ago, on sales of £6.62 billion.

Mr Witty also sought to distance the company's headquarters from the scandal, saying that it "knew nothing" about any fraud.

Since taking over as chief executive in 2008, Mr Witty has tried to promote Glaxo as a leader in ethical and transparent behaviour. Last year, the company agreed to pay a fine of $US3 billion to settle charges in the US that Glaxo had improperly promoted its antidepressants and had not reported safety data about Avandia, a drug for diabetes.

"To be crystal clear, we have zero tolerance for this kind of behaviour," Mr Witty said.

Glaxo's response has changed considerably since reports of bribery first surfaced a few weeks ago. Officials initially maintained it had not engaged in wrongdoing, saying it had investigated the claims and found them to be without merit.

But the company changed its tone after Chinese investigators raided its offices in Shanghai, detained four executives and went public with unusual detail about the practices they said they had uncovered.

The inquiry has expanded to include other drug companies. On Tuesday, AstraZeneca said some of its workers had been questioned in Shanghai, and Merck and Roche acknowledged they had used the same travel agency that has been implicated in the Glaxo inquiry.

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