SmithKline hit by inquiry into bribes

Simon Bowers
Tuesday March 12, 2002
http://www.guardian.co.uk/medicine/story/0,11381,665936,00.html
SmithKline Beecham, which merged with Glaxo to become Glaxo SmithKline, has become embroiled in a criminal investigation into the alleged bribing of more than 1,000 German doctors in order to secure orders for the drugs it manufactured in the late 1990s.

The company is suspected of having paid bribes of up to DM60,000 (20,000) to individual doctors in almost every city across Germany in return for them taking SmithKline Beecham products.

The public prosecutor's office in Munich has started an investigation following raids on a string of businesses two years ago, according to reports in the German press. Yesterday, a spokesman for GSK said they had not known the investigation was under way until the reports appeared.

Most of the doctors under suspicion are believed to have received between DM1,000 and DM3,000 between 1997 and 1999, but some individuals may have received DM60,000.

Investigators are thought to have heard varying explanations for the payments from those interviewed.

Raids on SmithKline Beecham offices in Munich took place in May 2000, months before the completion of the merger with Glaxo Wellcome. The combined business today has an annual turnover in Germany of about 500m. Details of the investigation overshadowed the departure of chairman Sir Richard Sykes, who yesterday announced his retirement.

During the past seven years, Sir Richard drove through two huge mergers - with Wellcome in 1995, and SmithKline Beecham in 2000 - transforming the business into Europe's largest pharmaceuticals firm.

He stepped back from the role of chief executive in 1997 to become non-executive chairman, but remained the leading figure behind GSK's acquisitive zeal.

But yesterday several City analysts insisted there were no signs that GSK had overstretched itself under Sir Richard's stewardship.

The GSK chairman, who plans to concentrate on his work as rector of Imperial College, will retire in May taking with him an annual pension expected to be worth more than the 657,000, secured two years ago. The exact figure will be released in the company's annual report, published next month.

Sir Richard said: "Having overseen the successful merger of GSK and as I approach my 60th birthday in August, I feel now is the right time to depart."

His successor is to be Sir Christopher Hogg, who is already a non-executive director at GSK, and holds a similar post at Reuters.