Last year, the sales in China of GlaxoSmithKline Plc climbed 20% to around GBP1 billion equivalent to US$1.5 billion. The amount was nearly quadruple the pace of progress in its emerging markets. Police said that the gain was due to bribes and sexual favors.

The drug manufacturer currently faces charges of economic crimes. This involved CNY3 billion or US$489 million of fake travels and meeting expenditures as well as exchange in sexual favors. The information came from Public Security Ministry yesterday. Glaxo stated that the accusations were "shameful" and would be a violation of the company's values.

The ministry that controlled China's police added that the company bribed hospitals, doctors including health officials. They tried to solicit sales which aided in boosting Glaxo's profits. KeplerCapital Markets' healthcare analyst, Fabian Wenner, stated that if Glaxo was guilty, it would be asked to pay a penalty. The fees would be equal to just a fraction of Glaxo's sales in China.

"While being involved in criminal offenses and associated with illegal actions is clearly damaging for GSK's reputation, I doubt that this will be of material impact for the company," Wenner said when he was interviewed yesterday.