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| GlaxoSmithKline's China headquarters--Courtesy of GlaxoSmithKline |
More accusations against GlaxoSmithKline ($GSK) are flying in China, but this time they're not about bribery. They're about taxes. A government-run legal newspaper alleges that the British drug giant evaded millions in taxes, compounding the company's growing problems in the country.
As China's Legal Daily newspaper claimed May 16 on its Weibo microblog, Glaxo skipped out on paying more than 100 million yuan ($16 million) in import duties and taxes for an HIV treatment between 2005 and 2008, Bloomberg reports. The company did not immediately return a request for comment.
It's not a good time to be GlaxoSmithKline's China unit, whose former chief Mark Reilly could be facing prison time, now that investigators have turned a $489 million bribery probe over to local police. The company itself could run into hefty charges or the cancelation of its business licenses in China--not to mention other penalties that its home country or the U.S. could leverage.
It's also not the first time in the past week that the government has used local news outlets to do some finger-pointing. Friday, state news agency Xinhua published an editorial--which often reflect the government's views--accusing Glaxo of manipulating drug prices and warning other multinational companies to "learn to respect the Chinese market."
Aside from the official punishment that could be on its way, GSK has suffered sales-wise in China ever since local authorities accused it last summer of using travel agencies to funnel bribes to healthcare providers. Glaxo's pharma and vaccines sales plunged 20% in Q1 of this year, weighing emerging markets growth for those products down to 2%. And those numbers could suffer a further downturn, with bribery probes ongoing in Jordan, Lebanon, Iraq and Poland.
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