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* China sales slump 61 percent as doctors shun GSK products
* Too early to quantify long-term impact of corruption probe
* Worldwide Q3 sales 6.51 bln pounds vs consensus 6.65 bln
* Q3 core EPS 28.9p vs 27.2p, helped by cost controls
By Ben Hirschler
LONDON, Oct 23 (Reuters) - GlaxoSmithKline's drugsales in China slumped 61 percent in the third quarter, hit by abribery scandal that has damaged its ability to market productsin the country and pushed some sales into the hands of rivals.
Chief Executive Andrew Witty said GSK's business in Chinahad suffered most where other drug options were available - asis the case with its top-selling lung medicine Advair, for whichAstraZeneca's Symbicort is an alternative treatment.
The fall in Chinese sales was steeper than many analysts hadexpected and Witty told reporters it was too early to say whenbusiness might recover. But he stressed there was "absolutely noquestion" of GSK pulling out of China.
"We are totally committed to China," he said in a conferencecall on Wednesday.
Although Britain's biggest drugmaker generates less than 4percent of its sales in China, it sees it a vital market for thefuture and has some 7,000 staff in the country, as well as fivefactories and a research centre.
Worldwide, GSK's sales were flat at 6.51 billion pounds($10.6 billion) in the quarter, generating core earnings pershare (EPS) of 28.9 pence, 10 percent higher than a year ago.
Analysts, on average, had forecast sales of 6.65 billionpounds and core EPS, which excludes certain items, of 27.2p,according to Thomson Reuters.
The higher-than-expected earnings number reflected lowercosts, including reductions in spending on research anddevelopment (R&D) as several expensive late-stage clinicaltrials reached a conclusion. Witty said the trend of lower R&Dcosts was likely to continue into 2014.
GSK reiterated that it expected sales growth for the year tobe around 1 percent in local currency terms, with EPS rising bybetween 3 and 4 percent.
TARNISHED REPUTATION
GSK's reputation has been tarnished and its management teamin China left in disarray by Chinese police allegations in Julythat it funnelled up to 3 billion yuan ($490 million) to travelagencies to facilitate bribes to doctors and officials.
Industry insiders and analysts had been expecting that thepolice probe - one of Beijing's biggest into a foreign company -would dent sales significantly in the three months to September.
Other multinational drug companies are also beinginvestigated but GSK has suffered the most damage from thescandal and many Chinese doctors have shunned its salesrepresentatives.
Swiss rivals Roche and Novartis, bycontrast, both saw continued growth in their Chinese drug salesin the third quarter.
Although China accounted for only 3.6 percent of GSK'sglobal drug sales last year, the company has been investingheavily in the country. Before the scandal, GSK's China salesrose 14 percent year-on-year in the three months to end-June.
Emerging markets are an important plank of Witty's growthstrategy as he grapples with slower uptake of GSK's products inthe developed world.
GSK has recently seen some encouraging progress with itspipeline of new drugs - including approvals this year for newtreatments for lung disease, cancer and HIV - but austeritypressures in Europe remain a drag on sales and profits.
