GSK share price: drug maker takes measures to clean up sales practices

on Dec 17, 2013
Updated: Oct 21, 2019
Listen, Tuesday, December 17: GlaxoSmithKline (LON:GSK) today announced changes to its global sales and marketing practices, becoming the first major pharmaceutical company worldwide to abandon the controversial industry tradition of paying doctors to promote drugs at medical conferences. In addition, GSK will remove individual sales targets for its sales and marketing staff and roll out a new sales force compensation programme, it said in a statement. The move comes after Britain’s biggest drug maker was hit by a huge bribery scandal in China earlier this year, although the company has denied the measures are directly related to its Chinese problems.

**Doctor payments**
GSK announced the start of a two-year process during which it will make a number of changes to how it works with healthcare professionals. It will stop paying healthcare professionals to speak on its behalf, about its products or disease areas, to audiences who can prescribe or influence prescribing and will also stop paying doctors to attend medical conferences. It will fund education for healthcare professionals through unsolicited, independent educational grant routes instead. GSK will continue to pay healthcare professionals for services related to GSK sponsored clinical research, advisory activities and market research. It will also continue to invest in community programmes to strengthen healthcare infrastructure, particularly in the least developed countries. The company anticipates that the changes will be in place across its global operations by the start of 2016.

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**Sales force compensation**
GSK said that its new compensation programme will have no individual sales targets, but sales representatives will be evaluated by their technical knowledge, the quality of the service they deliver and the overall performance of GSK’s business. The new compensation scheme is expected to be introduced in all of the countries where the company operates, by early 2015. GSK launched a similar reward scheme in the US in 2011 and has seen improved customer interactions and satisfaction rates.

GSK CEO Andrew Witty commented in the statement that all these changes are “designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse or other prescriber, it is patients’ interests that always come first”.
“We recognise that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest,” he said.

**Controversial promotion practices**
The global pharmaceuticals industry has been hit by scandals over inappropriate sales and marketing practices. GSK itself was accused by the Chinese authorities of channelling up to three billion yuan (£303 million) via a network of travel agencies to hospitals, doctors and officials in order to boost its drug sales. The police investigation led to a slump in the company’s sales in the world’s most populous country (China sales hit by bribery probe). In the US, GSK reached a record $3 billion settlement with the government last year over charges that it provided misleading information on certain drugs.

Among other major pharmaceutical companies, AstraZeneca (LON:AZN) in 2011 stopped paying doctors to attend international congresses, while others are expected to follow suit. In the US, an industry-imposed ethics code forbids the practice to pay doctors to attend medical conferences.
GSK’s share price was down 0.7 percent to 1,577.38p at 10:41 UTC, compared to a 0.4 percent decline in the blue chip FTSE 100 index.
**As of 10:28 UTC buy GSK shares at 1,577.50p.**
**As of 10:28 UTC sell GSK shares at 1,577.00p.**
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