UPDATE 1-Cameron raises GSK's problems as CEO joins him on China visit

Mon Dec 2, 2013 12:02pm EST

* PM stresses need for stable business environment -source

* Witty on first visit to China since bribery scandal

* CEO expects update on graft investigation "quite soon"

* GSK spokesman says trade trip shows commitment to China

By Andrew Osborn and Ben Hirschler

BEIJING/LONDON, Dec 2 (Reuters) - British Prime Minister David Cameron raised GlaxoSmithKline's problems in China - where it is being investigated for alleged bribery - with political leaders on Monday as the drugmaker emphasised its commitment to doing business there.

Cameron, who is visiting China with executives including GSK chief executive Andrew Witty, discussed the company's dilemma with China's leaders and stressed the need for a stable, predictable business environment, a person familiar with the matter said.

Witty is part of a 100-strong trade delegation travelling with Cameron. It is Witty's first visit to China since the corruption scandal blew up in July and a GSK spokesman said his presence underscored a desire to continue operating there.

Witty himself declined to comment on the investigation into alleged illegal payments by GSK to doctors and officials, but he told Reuters in Beijing that the British drugmaker would have something to say "quite soon".

GSK is Britain's largest pharmaceuticals business and a major employer of skilled workers, including many scientists. Witty has advised Cameron on business matters in the past and recently wrote a report on universities for the government.

The scandal has tarnished the image of both GSK and its CEO, who has sworn to get to the bottom of any wrongdoing.

Commenting on his visit, GSK spokesman Simon Steel in London said: "It's an important opportunity to show our continued commitment to China and to supplying our medicines to the country."

Chinese police have accused GSK of funnelling up to 3 billion yuan ($492 million) to travel agencies to facilitate bribes to boost its drug sales. The accusations are the most serious against a multinational in China in years.

GSK's sales in China dived 61 percent in the third quarter after hospital staff shunned visits by its sales teams in the wake of the investigation.

Legal and industry sources told Reuters last month that police were likely to charge some of GSK's Chinese executives but not the company itself. One person with direct knowledge of the situation said the police investigation was likely to be concluded by around early December.

GSK has said some of its senior Chinese executives appear to have broken the law. It has also said it has zero tolerance for bribery, calling the allegations in China "shameful".

GSK sold 759 million pounds ($1.2 billion) of pharmaceuticals and vaccines in China in 2012, up 17 percent on 2011, representing about 3.5 percent of its worldwide total.

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