By Laurie Burkitt 

BEIJING-- GlaxoSmithKline PLC is cutting employees in China, said a person familiar with the matter, as the U.K. drug company grapples with Beijing's accusations that it bribed doctors and officials to help sales.

Glaxo has terminated employees in China in recent months following increased monitoring of employee expense claims, the person said. It isn't clear how many employees have been let go. Previously, Glaxo has said it employs about 7,000 people in China.

In a statement Friday, Glaxo said it regularly monitors employee expenses globally but has increased monitoring since the Chinese government launched a probe of the company. "Where we have found potential issues, we are thoroughly reviewing them and have withheld incentive payments where appropriate," the statement said.

It added that Glaxo has continued to pay base salaries and that the company will be paying regular bonuses to employees who pass monitoring.

Chinese officials alleged last year that Glaxo employees held fake conferences and funneled the money for expenses as bribes for doctors, hospital administrators and government officials to prescribe more drugs. Often the funds were funneled through travel agencies, officials alleged. China's Ministry of Public Security said in July that the company improperly transferred 3 billion Chinese yuan ($489 million) through travel agencies since 2007.

Glaxo has said some senior executives may have violated Chinese laws and the company is cooperating with Chinese authorities in its investigation.

The probe marked a setback for the big drug maker in a market long seen as promising by the pharmaceutical industry. China represents a modest 2% of Glaxo's total global drug sales, though it has been an important source of sales growth for the company in recent years.

Sales in China fell 29% in the fourth quarter from a year earlier, while third-quarter sales fell 61%. Glaxo didn't break out further sales data for those periods. The company said China sales in the fourth quarter of 2012 rose 17% to GBP759 million, or $1.26 billion at current exchange rates, up from the same period a year earlier.

The company named last July a new head of its China operations, Herve Gisserot, succeeding its former China chief executive, Mark Reilly.

The company has moved to tighten its operations globally amid greater scrutiny from governments and regulators all over the world. Glaxo announced in December a new global policy to stop paying doctors to attend medical meetings or to speak about its drugs and the diseases treated by its medicines. Such payments, often for attendance at far-off meetings in exotic vacation resorts or to influential physicians who can sway industry decisions, have been a vital part of pharmaceutical marketing.

Glaxo agreed in 2012 to pay $3 billion and plead guilty to criminal charges in the U.S. that it illegally promoted drugs and withheld drug-safety data from regulators in the country. The deal was the largest health-care fraud settlement in U.S. history and led Glaxo to end its practice of paying U.S. salespeople based in part on how many prescriptions the doctors they sold to wrote--a practice the Justice Department said led to irresponsible marketing.

Write to Laurie Burkitt at laurie.burkitt@wsj.com

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