Glaxo Says China Sales Improved Since 61% Third-Quarter Drop

Jan 15, 2014 12:07 pm ET

(Updates with closing share price in fifth paragraph.)

Jan. 15 (Bloomberg) -- GlaxoSmithKline Plc said sales in China, where the company is facing a bribery probe, have improved since the third quarter, when drug revenue plunged 61 percent from a year earlier.

“The trend is definitely looking a bit more positive” since the quarter ended Sept. 30, Chief Financial Officer Simon Dingemans said in an interview in San Francisco at JPMorgan Chase & Co.’s health-care conference. “We can see the future opportunities to rebuild the business as and when we get to the other side of the inquiry. We’ll be working hard in 2014 to deliver that.”

Allegations by China’s government that Glaxo bribed hospitals, doctors and officials drove sales to some competitors with similar products, Chief Executive Officer Andrew Witty said in October. The London-based company has conducted a review of its operations in other emerging markets and implemented additional anti-bribery controls and measures in higher-risk countries, Dingemans said.

“So far, we see this situation confined to China,” he said.

Details on fourth-quarter China sales will be released on Feb. 5, when the company is scheduled to report full-year results. Glaxo shares rose 1.7 percent to close at 1,619 pence in London.

Reshaping Business

The U.K.’s biggest drugmaker received regulatory approval for five new medicines last year, which helped the shares gain 21 percent. The company will be focused on market introductions of those drugs as well as divesting older products, Dingemans said. Such disposals and reshaping of businesses, rather than large-scale acquisitions, are likely to be an industry trend this year, he said.

“Focusing on what you’re good at is really what’s differentiating you, and that’s what we’ve been trying to do with our portfolio,” Dingemans said.

Glaxo last year sold its Lucozade and Ribena drinks brands to Suntory Beverage & Food Ltd. for 1.35 billion pounds as well as its injectable thrombosis brands to Aspen Pharmacare Holdings Ltd. for 700 million pounds.

In April, the company formed a portfolio of more than 50 older products such as the Zantac antacid, to separate them from its other growing products.

--Editors: Angela Zimm, Thomas Mulier