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Industry Group blasts GSK's supplier demands in letter to UK Prime Minister

By Dan Stanton+

06-Dec-2013

An industry group has criticized GSK’s alleged demands for supplier rebates and bonuses in a letter sent to the UK Prime Minister, David Cameron. 

Last week, Sky News published an article accusing GSK of demanding ‘bonus’ payments from its marketing firms, based an unidentified source.

Today the Forum of Private Business (FPB) - a UK-based membership organization representing over 25,000 small and medium-sized businesses - has appealed to David Cameron MP in a letter to consider whether this was “reasonable and fair practice.”

“GlaxoSmithKline, Britain’s biggest drugs company, has asked some of its marketing agencies to agree to rebates, both for future and past work,” wrote Phil Orford, FPB’ Chief Executive. “GSK has also asked companies to provide a one-time sign-on bonus to be part of its Global Digital Roster.”

Comparing GSK’s actions with those of Premier Foods last month, he continued: “You will appreciate my concerns that these types of process will likely have a detrimental effect on some of those businesses that supply the organisations, threatening their long-term sustainability.”

Speaking to Outsourcing-Pharma.com, FPB’s Head of Policy Alexander Jackman said: “This is not normal practice and nor should it become normal practice, especially for a company such as GSK.”

GSK: "Reducing Complexity"

We approached GSK directly and though the company neither offered comment on the FPB’s letter, nor the alleged letter it sent to its marketing suppliers, spokesman Simon Steel did speak to us about its supplier relationship strategy.

“As part of a long running programme we are reducing complexity in these relationships by increasing the levels of business we place with key suppliers while securing discounts on volumes of services,” he said.

“Cost is never the sole factor considered in the award or renewal of business,” he continued, adding the selection process “takes an overall view of a number of factors including quality, performance, adherence to GSK values and total cost competitiveness.”

This incident is the second time the business community has condemned GSK’s behavior towards its suppliers this year. Back in January , the multinational changed its payment schedule for its suppliers, making only once-monthly payments, and leading to criticism it was boosting its own profits at the cost to smaller firms.

CEO Andrew Witty is accompanying David Cameron to China this week as part of a 100-strong trade delegation, for the first time since reports of a bribery scandal surfaced in July.

If the FPB letter reaches David Cameron in time, it may be an awkward flight back for Witty.

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