China is widely viewed as a critical global growth market and the pharmaceutical industry sees it no different. Unfortunately for GlaxoSmithKline (NYSE: GSK) the pursuit of increased revenue has led to allegations of a massive $489 million bribery scheme. In the wake of that announcement Glaxo's sales in the Middle Kingdom dipped dramatically and its plans to more than double China's importance to 10% of overall sales by 2018 may prove challenging.
The newest rumored twists in this scandal involves politically connected corporate whistle blowing and a sex tape featuring Glaxo's former China head Mark Reilly that was sent to the pharma's senior management including CEO Andrew Witty. As the story gains tabloid traction, it continues to shine an unwanted light on the company's sales tactics, which are being investigated by the UK's Serious Fraud Office, and in a number of countries.
In this episode of Where the Money Is, health care analysts David Williamson and Michael Douglass discuss the latest twists in turns in China, the investigations surrounding Glaxo's marketing, and what it all means for investors.