China fines Glaxo $489M, ending bribery investigation

China fined GlaxoSmithKline a record $484 million and imposed a suspended prison sentence on an executive for bribing doctors, capping a 15-month investigation that curbed the U.K. drugmaker's sales.

Glaxo will pay the fine with cash on hand and take a charge against third-quarter earnings, the London-based company said in a statement Friday. A court in China sentenced Mark Reilly, formerly Glaxo's top executive in the country, to three years in prison with a four-year reprieve, meaning he will not face jail if he does not break the law. Reilly will be deported, the official Xinhua News Agency said, without specifying whether he would be forced to leave immediately.

"Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK," chief executive officer Andrew Witty said in the statement. "We have and will continue to learn from this."

Wrapping up the Chinese investigation may ease pressure on Witty, who has struggled with disappointing sales in the United States and allegations that employees also paid bribes or committed other improper conduct in Syria, Iraq, Poland, Jordan, and Lebanon. Glaxo has said it has no tolerance for wrongdoing and investigates all allegations.

The fine is the biggest corporate penalty ever in China, Xinhua said. Still, the figure, equal to 1.1 percent of Glaxo's sales last year, came as a relief to some investors. Glaxo shares rose 0.9 percent in trading on the London Stock Exchange. The company paid a $3 billion fine in 2012 to settle a U.S. investigation into how it marketed drugs and reported data.

"It's not massive," Nick Turner, an analyst at Mirabaud, said of the Chinese penalty. "The market will be relieved the fine isn't of the magnitude that people were concerned it could be."

Glaxo still faces investigations by the U.S. Justice Department and the U.K.'s Serious Fraud Office.