weep no more for Witty…

Posted on Friday 19 September 2014

Pharmalot: WSJ
by Ed Silverman
September 19, 2014

After months of anticipation, a Chinese court found the GlaxoSmithKline subsidiary in China guilty of bribing doctors, hospital officials and other non-government personnel, and fined the drug maker more than $490 million, The Wall Street Journal reports. This becomes the largest such penalty levied on a company in China. At the same time, Mark Reilly, the former head of the Glaxo unit in China, pleaded guilty to bribery-related charges and was given a three-year suspended sentence. There are varying reports, however, whether he will be deported or required to remain during that time. Four other senior Glaxo managers in China also received suspended sentences of between two and four years…

The court decisions cap a tumultuous episode for Glaxo, which was already struggling to restore its image and revamp business practices in the wake of a $3 billion settlement with U.S. authorities two years ago. The drug maker had been accused of failing to disclose clinical trial data for certain medicines and improperly marketing drugs, among other things.

Andrew Witty, the Glaxo chief executive, issued a brief statement: “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people.” [here is the official apology, too]

Glaxo previously acknowledged investigating claims employees bribed doctors in Poland, Iraq, Syria, Jordan and Lebanon. Meanwhile, the FBI and the U.S. Securities and Exchange Commission are probing its activities in China. As part of a probe into the pharmaceutical industry, U.S. authorities have been eyeing its overseas dealings since 2010 for possible violations of the Foreign Corrupt Practices Act. And the U.K.’s Serious Fraud Office is also conducting an investigation…

Lest you are feeling sorry for Sir Andrew Witty and GlaxoSmithKline, you might want to check out this bio from Forbes with his 2012 Financials:

Sir Andrew Witty, 31 January 2008 and as Chief Executive Officer on 21 May 2008. Sir Andrew joined GSK in 1985. He has worked in the UK, South Africa, the USA and Singapore in various senior roles. In 2003, he was appointed President of GSK Europe and joined GSK’s Corporate Executive Team. In 2003 he was awarded the Public Service Medal by the Government of Singapore and in August 2012 was also awarded the Public Service Star. In the 2012 New Year Honours list, he was awarded a Knighthood for services to the economy and to the UK pharmaceutical industry. He served as the Lead Non-Executive Board member for the Department of Business, Innovation and Skills to December 2013. He was also President of the European Federation of Pharmaceutical Industries and Associations until July 2013.

Salary $1,033,000
Bonus $905,000
All other compensation $49,000
Non-equity incentive plan compensation $1,905,000
Total Compensation $3,892,000

And if you’re a stickler for dates, you might notice that his Presidency of the EFPIA [European Federation of Pharmaceutical Industries and Associations] ended in July 2013 which happens to be right after the damning leaked memo [a closing argument…, in the shadows…] outlining their plan to undermine the EMA [European Medicines Agency] Data Transparency efforts [which may have succeeded] [see abuzz over there…, a coup d’état…].

Ed goes on to tally up Sir Andrew’s assets column:
It is worth noting that Witty has now spent half of his six-year tenure trying to overhaul business practices, and has still more fines and investigations to show for his efforts. Granted, cultural differences require varying approaches to success around the world, and Glaxo is not the only drug maker facing this challenge. But Glaxo is now something of a poster child for scandal.

Witty has made headway in other areas. In particular, he has won kudos for his push to make clinical trial data more readily accessible to researchers, a move that has helped Glaxo deflect much of the criticism leveled at the pharmaceutical industry otherwise. In trying to resolve this highly contentious issue, he placed himself and Glaxo in a leadership position. And Witty is cutting ties between compensation for sales reps and the number of prescriptions that doctors write for Glaxo drugs

Whether he emerges unscathed by the latest developments in China – and unfolding events elsewhere – remains to be seen, of course. But Witty may need to have Glaxo executives practice some of the self-criticism that Chinese Communist Party leaders preach as a path toward rehabilitation.
I am in a less forgiving mood. It’s impossible for me to imagine that he wasn’t involved in that EFPIA plan to undermine Data Transparency, even if publicly, "he has won kudos for his push to make clinical trial data more readily accessible to researchers, a move that has helped Glaxo deflect much of the criticism leveled at the pharmaceutical industry otherwise." Enough already with his double dealing!
    September 19, 2014 | 6:14 PM


    September 20, 2014 | 1:31 AM

    Excellent Blog post as usual!
    Hope you don’t mind me re-blogging it..

    thanks 🙂

    September 20, 2014 | 2:05 AM

    Dig deeper Mikey and you’ll probably find that a deal was struck when Witty accompanied British PM David Cameron to China earlier this year.

    According to the court report, “it (the court) had taken into account that he (Reilly) had returned from Britain to face the investigators, and that he had “truthfully recounted the crimes of his employer,” meriting a relatively lenient punishment”

    I dissect this here – http://fiddaman.blogspot.co.uk/2014/09/gsk-plead-guilty-for-being-very-decent.html

    September 20, 2014 | 3:27 AM


    Thanks for that update. I wondered about the leniency in sentencing too, and about the secrecy of the trial – had Reilly’s fate had been purchased somehow. ¥3 B isn’t $3 B, though it’s not to be sneezed at. But it seems pretty light given that this was a conviction for an admitted crime with some real life criminals. Like many of the wheelings and dealings that have to do with GSK [and PHARMA in general], there’s always a feeling that back room negotiations and court intrigues carry the day.

    September 20, 2014 | 3:46 AM

    Deals were struck with the DOJ too – The $3B fine was not the original target, it was around $10B – at least that’s what I was told from one of the whistleblowers.

    September 20, 2014 | 4:06 PM

    Dammit, no hangings.

    September 21, 2014 | 9:46 AM

    Hmm, starts with pharma, maybe next to the clinicians who write scripts without any sense of real accountability? I’d love to watch these crazed benzo pushers get arrested, maybe others will take notice??

    Time and karma, quite the couple when things finally get accomplished…

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