GlaxoSmithKline is poised to cut its workforce in China by nearly 15% as product sales continue to be affected by the recent bribery scandal.
Citing six sources close to GSK local news outlet Caixin reports that the pharma giant plans to lay off around 1,000 employees in China in 2015, beginning with 450 jobs to be axed in the first three months on the year.
Caixin also reported that hundreds of sales reps have already been dismissed, with the cuts quietly carried out between March and June last year.
News of the job losses comes just four months after the company felt obliged to issue a public “statement of apology to the people of China” after it was found guilty last year of bribing doctors to prescribe GSK products and fined $487m.
The statement saw the company sincerely apologise “to the Chinese patients, doctors and hospitals, and to the Chinese Government and the Chinese people”.
As the preeminent emerging market China has been area of growth for GSK over the past couple of decades and the company now has six manufacturing sites and a global R&D site there and employs some 7,000 employees in the country.
However, since the scandal broke in 2013 the company’s reputation has taken a battering in the region and overall sales in China plummeted by 61% in the third quarter of that year.
According to the company’s most recent financial statement revenues did pick up in China 2014, although it seems the damage has been done and lay-offs are now needed to cope with the financial impact.
GSK has already seen senior figures in China lose their jobs, including former country head Mark Reilly who was sentenced to three years in prison – suspended for four years – and has been deported from the country.
Former executives who are currently serving jail time include former human resources director Zhang Guowei, former operations manager Liang Hong and former legal affairs director Zhao Hongyan. Business development manager Huang Hong also received a suspended sentence.
The scandal also caused GSK to revise the way it compensates sales reps globally. In December 2013 the company said it will no longer use individual sales targets but will instead reward sales professionals working directly with prescribers on the basis of their “technical knowledge, the quality of the service they deliver to support improved patient care and the overall performance of GSK’s business”.
At the time of writing GSK had yet to respond to a request from PMLiVE to comment on the job cut reports.