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I have struggled for the better part of two days now to not write about GlaxoSmithKline pharmaceuticals (LSE:GSK). I’ve already written about GSK and its share price five times in the first six months of 2014. What more could there possibly be to report? Nonetheless, GSK just seems to have a way of gaining attention, whether it is good or bad, and, in order to be fair to investors – and to GSK – we have an obligation to keep investors abreast of the news that could drive the share price up or down.
The problem with GSK is that nearly every time there appears to be a reason for the price to go up, there simultaneously appears to be just as much of one to drive it down. Here’s (some of) the current mix potential share price-driving GSK news.
The Chinese Corruption Case
The allegations of bribery and corporate corruption are over a year old now, but they have been compounded and overshadowed by the “gskwhistleblower’s” revelations of inappropriate behavior on the part of Mark Reilly, the head of GSK’s China operations. Reilly hired a private investigative firm headed by Brit Peter Humphrey to conduct “wide ranging inquiries into difficult commercial matters.” I’m somewhat proficient in business doublespeak, so I take that to have more to do with finding out who is blowing the whistle than it does with finding out what has been happening relative to bribery and corruption.
Regardless, fast forward to this week. Mr. Humphrey and his wife on now being prosecuted on charges of illegally gathering information on Chinese citizens, to which Humphrey has already said, “I sometimes used illegal means.” BAD NEWS FOR GSK.
Suspicion of Syrian Scandal
Executives at GSK have now received anonymous claims that the same kind of bribery that had characterized the company’s China operations are happening in Syria, Iraq, Jordan, Lebanon and Poland.
GSK is one of the last western pharmaceutical companies still operating in Syria, but it has discontinued distribution of consumer products, limiting its efforts to prescription drugs. Similar to the other claims, the allegations are that representatives of the company may have paid bribes to increase the sales – through issuing of prescriptions – of GSK products. BAD NEWS FOR GSK.
Canadian Contamination Cleanup
Earlier this year, government inspection teams found bacterial contamination in the company’s Ste. Foy, QC flu vaccine production facility. The plant produces more than 50% of Canada’s total volume of seasonal vaccine supply. It is the only flu vaccine production facility in Canada.
As a result of the findings, GSK was required to develop a remediation plan and submit it for government approval. The Canadian government has approved the plan and now “will monitor the progress of the implementation of the corrective action plan and conduct regular testing on lots of vaccine prior to their release onto the Canadian market.” The problem appears to be fixed, but the publicity remains. NOT GOOD NEWS FOR GSK.
Efforts to End Ebola
GSK is in charge of leading the research program to prevent the spread of the deadly Ebola virus. With the virus spreading across western Africa and the increasing potential of it going transcontinental, the urgency for development of a effective vaccine has increased dramatically. Time is, as they say, of the essence. GSK and the World Health Organization are racing against the clock to attempt to have a solution by early 2015.
This goal will mean some cooperative testing and approval shortcuts, but both GSK and the WHO believe that the goal is achievable without cutting corners to sacrifice absolute confidence in the efficacy of the final treatment. GSK has said that “The pathway and process are probably going to be a little different, but the basic principles are the same.” VERY GOOD NEWS FOR GSK.
The GSK share price closed at 1.377.50 on the LSE, moving only slightly from yesterday’s close of 1,376.50, and down from 1,562.00 on 11 July.
See also Analyze This: GSK, Footsie Pharmaceutical Day, GlaxoSmithKline in Trouble Again!, GSK’s Witty Response to Executive Bonuses, and You’d Better Watch Your Albligitude.
