Drugs giant GlaxoSmithKline has revealed a corruption probe in China sent sales of pharmaceuticals and vaccines in the country plummeting 61%.
Shares in the maker of Sensodyne, Panadol and Aquafresh dropped 2% after it reported the sales blow and a 6% pre-tax profits fall to £1.4bn during the three months to the end of September.
Glaxo has been under pressure since it emerged during the summer that Chinese authorities are investigating bribery by its staff – which allegedly saw millions of pounds paid to doctors and health officials to boost sales and raise prices.
Chief executive Andrew Witty has previously labelled the scandal “shameful” but blamed it on a handful of senior managers who were “acting outside our processes”.
Glaxo saw pharmaceuticals and vaccines sales in China slump to £77m during the quarter as Chinese authorities continue their investigation. The group typically makes 3-4% of its annual sales in China.
It said: “We continue to co-operate with the authorities and we remain fully committed to supplying our products to patients in the country.
“At this stage, it is still too early for us to quantify the longer-term impact of the investigation on our performance in China.”
The company has informed Britain’s Serious Fraud Office as well as the US Department of Justice and the US Securities and Exchange Commission.
Despite the Chinese probe group sales grew 1% to £6.5bn and Glaxo confirmed its target for 1% annual sales growth and a 3-4% increase in earnings per share.
The summer heatwave, promotions and new flavours helped sales of Lucozade and Ribena grow by 9% and 11% respectively.
Glaxo is selling the popular soft drinks brands to Orangina Schweppes owner Suntory for £1.35bn.
Europe set the pace with pharmaceuticals and vaccines sales growth of 5%, while the US and Japan both grew by 2%. Sales in its emerging markets and Asia Pacific (EMAP) region dropped 9% on the China impact.
Analysts at Bank of America Merrill Lynch said the results were “impressive in light of the implosion in the Chinese business”.