RealGlobalNews UK Company Profiles - Glaxo

GSK or GlaxoSmithKline is the second largest pharmaceuticals company in the world and it made a 31 thousand dollars a minute in 2006. The name is the result of more than half a century of mergers that have involved New Zealand's Glaxo, Wellcome in the UK, Beecham's in Britain, the U.S.'s Smith and Kline companies as well as a host of others. As it made its 31 thousand dollars a minute, the HIV-infected of the poor world were facing waits of 20 years for new drugs as they were punished by lobbied lawmakers in Washington for attempting to make cheaper generic versions of GSK medicine. GSK is currently lobbying for Republican candidate John McCain.

Whilst much criticism of GSK has centered on animal rights testing, this film focuses on elements that may truly affect the company's future earnings.

It was four years ago that the U.S. Internal Revenue levied the largest backtax claim in history - GSK had to pay 8 billion dollars. This came after GSK was fined 90 million dollars for overcharging the U.S. government for drugs. The cuttings file on GSK is littered with scandals associated with its abuse of government funding, from using orphans to test AIDS drugs to evade laws on experimentation to massive tax dodges.

The biggest criticism of the company concerns AIDS which continues to devastate swathes of the world. GSK failed to beat off South African President Thabo Mbeki's attempts to ingeniously use WTO rules to allow cheaper versions of GSK drugs into his country. It was a big fight that suggested to many commentators that GSK was more interested in massive salaries for its board than making a fair profit out of saving the lives of millions.

It was in Italy that authorities publicised what is well known about GSK - that it actively bribes doctors and health services to use its drugs. In just a two year period, Italian police said that GSK's bribes totalled more than quarter of a billion dollars. Their investigation, they claimed, saved the Italian government's health budget more than half a billion.

GSK issued warnings to its representatives as soon as filmmaker Michael Moore announced he intended to investigate the U.S. healthcare system . At the time, there was growing concern over its drug, Paxil which the British government concluded was being administered to millions of children whilst GSK knew that it may have no beneficial effect on them. A 1998 GSK memo, said "the company must manage the dissemination of data in order to minimise any potential negative commercial impact."

That memo aided the case which GSK settled with New York now governor, Eliot Spitzer. GSK paid 2 and a half million dollars to settle. The company paid 150 million dollars to settle fraud allegations over inflating prices of Zorfran and Kytril nausea drugs. It admitted no wrongdoing whilst the U.S. Justice Department argued that GSK charged private providers lower prices for drugs so that they could pocket the difference.

In May of 2007, GSK shares were hit by proof of increased heart risk associated with its new drug Avandia.

For the future, GSK's share price may well be affected by boycotts of its products. To date, Canada, India and a host of groups in the United States have campaigned for boycotts of GSK medicines. But so far it has been controversy over drugs such as Paxil, Seroxat and AZT that have pushed its stockprice down.It is alleged, for instance, that GSK is trying to protect its patent for AZT by slowing the release of a more powerful and less toxic AIDS drug, 1-5-9-2.

Perhaps the best way to look at a company that has settled so many lawsuits that have affected so many millions of people is to look at who works there.

CEO, Jean-Pierre Garnier who has come under fire for massive salary packages whilst refusing to lower prices for life saving drugs in Africa is on the board of the company that makes Blackhawk helicopter gunships. He benefits twice from the war in Iraq.

His Chief Finance Officer was John Coome who whilst at a company that had the biggest problems with U.S. tax authorities in history was a member of the code committee of the UK takeover panel.

It's CFO now, Julian Heslop was an auditor at Stoy Hayward, implicated in many financial scandals including Polly Peck and the recent savings scam in Britain, Farepak.

Paul Allaire, responsible for salaries was chairman of Xerox where he sold 16 million dollars of stock options before the company was found to have used accounting tricks to defraud investors by the SEC.

Even financial analysts now look poorly on the company, particularly as it has rushed to improve corporate governance in the face of so many claims that will hit its insurers hard.

For the moment, the UK Serious Fraud Office has recently launched their inquiry into GSK's involvement in Iraq where it is alleged it aided the Saddam Hussein regime.