GSK share price falls after staff dismissals

GlaxoSmithKline’s (LON:GSK) share price has fallen since the announcement on Friday, 06 March that 110 employees in China were sacked from the company for misconduct. The company’s recently released annual report confirmed that the total number of disciplinary actions taken against employees in China had increased from 48 in 2013 to a much heavier 652 in 2014. This new spate of staff dismissals follows the huge corruption scandal that rocked the company in 2013 and saw them pay out a fine of £300m.

It was discovered that GSK had directed vast amounts of renminbi to hospitals, doctors and government officials in an attempt to boost their sales and while the fine from last September ended the investigation by Chinese authorities, the company could still yet face fines from both the UK Serious Fraud Office and the US Department of Justice.
The reputation of GSK has since been tarnished within China following the scandal, and sales of their respiratory drugs in the US have also seen a decline, bringing more discontent to the troubled company. Due to these setbacks, chief executive Sir Andrew Witty has suffered a pay cut that reduced his income by almost half of his usual salary. Despite this, GSK has announced that it will retain its Chinese operations with the intent to reform its policies and ensure the company is operating to the highest possible standards.

As of 09:52 GMT, GSK’s share price was trading 1.25 percent lower at 1,540.5p following on from Friday’s close of 1,557.5p.
According to the Financial Times, the 24 analysts offering 12 month price targets for GlaxoSmithKline plc have a median target of 1,539.5p, with a high estimate of 1,810p and a low estimate of 1,250p.
As of Feb 28, 2015, the consensus forecast amongst 30 polled investment analysts covering GlaxoSmithKline plc has it that investors should hold their position in the company.
As of 12:46 GMT, Monday, 09 March, GlaxoSmithKline plc share price is 1,546.50p.