LONDON – Glaxosmithkline (GSK) plc is to pay a £297 million (US$490 million) fine after a court in China found it guilty of bribing doctors to prescribe its drugs.

The former head of the Chinese subsidiary, Mark O'Reilly, received a three-year suspended jail term and is to be deported. Other GSK executives received suspended jail terms.

The London-based company posted a "Statement of Apology to the People of China" on its website in Chinese, saying it fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities.

GSK said it "deeply regrets" the damage caused and sincerely apologized to the Chinese patients, doctors and hospitals, and to the Chinese Government and the Chinese people. The company has "reflected deeply and learned from its mistakes" and "must work hard to regain the trust of the Chinese people," the statement said.

Andrew Witty, CEO, said the case "has been a deeply disappointing matter for GSK," but said the company will continue to invest in China.

Drawing a line under the bribery probe is clearly a relief for Witty. "Reaching a conclusion in the investigation of our Chinese business is important," he said, adding, "We will continue to learn from this."

However, the company may not be out the woods yet, since the UK Bribery Act allows for penalties for corporate corruption carried out in other jurisdictions. The UK Serious Fraud Office is investigating GSK currently, though the exact subject of the inquiry has not been disclosed.

The statement also offered an apology "for the harm caused to individuals who were illegally investigated," a reference to GSK's use of private detective Peter Humphrey to investigate the background of some Chinese citizens. (See BioWorld Today, July 16, 2014.)

GSK said it has cooperated fully with the authorities in China and has taken steps to make sure there can be no repeat. It no longer links salaries to sales targets, has set out new rules of engagement with health care professionals and put in place more stringent monitoring of invoices and payments.

The charge against GSK was that it paid $481 million in bribes to increase drug sales, with the result that the prices of its drugs had to be inflated to cover the cost of bribes. According to Chinese media reports, GSK's drugs were up to seven times more expensive in China than in other countries. The bribes were said to have led to a huge jump in GSK sales revenue in China. (See BioWorld Today, May 21,2014.)

GSK may be exposed as one bad apple, but it is generally acknowledged that such bribery is commonplace in China. Doctors are poorly paid and financial inducements are seen as the way to oil the system.

In its statement of apology, GSK has pledged to become a beacon of probity, saying it will "take tangible actions to establish itself as a model for reform in China's health care industry."