GlaxoSmithKline Plc (GSK) said third-quarter sales of pharmaceuticals and vaccines in China fell 61 percent after an anti-corruption probe began there in July.
Sales of consumer health-care products in China fell 29 percent, the London-based company said today in a statement. Total revenue rose 1 percent to 6.51 billion pounds ($10.5 billion), compared with 6.64 billion pounds expected by analysts.
In China, a “dramatic decline” in Glaxo’s Seretide lung drug and Flixonase nasal spray has led to a rapid acceleration in sales of AstraZeneca Plc (AZN)’s Symbicort inhaler, Barclays Plc analysts said last week. China accounts for slightly less than 3.5 percent of Glaxo’s global pharmaceutical revenue and is less profitable than its Western businesses, though the world’s most populous nation presents significant growth opportunities, the analysts said.
“It is still too early for us to quantify the longer-term impact of the investigation on our performance in China,” Glaxo said in the statement.
Allegations by China’s government that Glaxo bribed hospitals, doctors and officials prompted Witty to dispatch his head of emerging markets to China to oversee the company’s response. Some senior executives appear to have acted outside Glaxo’s processes and controls to both defraud the company and the Chinese health-care system, Chief Executive Officer Andrew Witty said on July 24.
Third-quarter earnings excluding some items were 28.9 pence a share. That compared with the average estimate of 27.2 pence from 17 analysts surveyed by Bloomberg.
The company maintained its forecast for the year as revenue from other regions offset the declining sales in China.
Glaxo shares fell 0.7 percent to 1,590 pence at 12:08 p.m. in London. Before today, the shares had returned 24 percent this year, compared with a 21 percent return in the Bloomberg Europe Pharmaceutical Index.