GlaxoSmithKline Plc has cut 40 percent of its sales reps in China and axed some units as it eyes a return to growth in 2016, after sales plunged during a bribery scandal that landed it with a record $490 million fine in 2014.

The British firm is gambling on a new, cleaner image to reboot its performance and reputation with doctors and consumers, China head Herve Gisserot told Reuters during a wide-ranging interview at the group's Shanghai headquarters.

It is the first time Gisserot has spoken at length about the firm's progress since the high-profile scandal, which saw his predecessor Mark Reilly charged with bribery and eventually deported to Britain. Reilly has since left the company.

"Obviously GSK is a very well-known name in China and unfortunately not for the right reasons," said Gisserot, who took over as general manager in July 2013 soon after the scandal surfaced. "We are in the process of rebuilding our reputation, and we have to be very humble."

GSK has previously said it would overhaul its business in China, and more globally, to avoid some of the issues that led to the probe, including stopping all sales-based incentives for drug reps and reducing paid junkets for doctors.

The problem is, many of GSK's rivals are not following in step, and adapting to a new model means taking a business hit.

"If you look at the short-term business performance, it's not great," said Gisserot.

GSK's China sales dropped from 759 million pounds ($1.2 billion) in 2012 to 585 million pounds in 2013 and were flat in 2014. This year has been volatile, after the disposal of peripheral operations and disruption to a factory in Tianjin following deadly explosions in the port city in August.

But despite its woes GSK China remains profitable, and Gisserot expects sales to grow again in 2016, before rising in double digits from 2017, helped by the rollout of new products, including HPV vaccine Cervarix.

SHRINKING

GSK, in China since 1910, has shrunk its business since the scandal, drastically reducing promotional activities and focusing its resources on a smaller number of therapy areas including hepatitis, respiratory disease and vaccines.

The number of front-line sales reps has fallen from 5,000 to around 3,000, and GSK is putting a focus on hiring new graduates who don't have the "baggage" of established peers.

This smaller team won't have traditional sales-driven incentives, a fact GSK hopes will reduce the likelihood of bribery, but will undoubtedly hit sales in the short run.

"Our ability to win under the new model is a question I regularly have to debate with our own employees," Gisserot said. "Can we outperform the market in the short term? Probably not."

China's drug market is the world's second largest but grwoth is slowing. After expanding around 15 percent annually in the first half of the decade, sales are set to grow just 6-9 percent a year over 2016-2020, according to IMS Health. Gisserot believes even that forecast could be optimistic.

GSK sales staff now have to work very differently. Reps have iPads to monitor every interaction with doctors, while fancy meals on expenses have been replaced by a centrally controlled catering system providing "lunch boxes" worth no more than 60 yuan ($9.40). The move is explicitly designed to take cash out of the system.

Bonuses also make up just 25 percent of salaries, down from 40 percent pre-scandal, and won't be tied to sales.

PRICE PRESSURE

The wider market has seen huge price pressures on drugs as Beijing tries to curb over-prescribing by hospitals, which still make money from dishing out drugs, and rein in an overall healthcare bill set to expand to $1.3 trillion by 2020.

Gisserot said this would erode sales of expensive branded generics - long a cash cow for Big Pharma in China - and shift the industry's reliance towards more innovative drugs, hopefully helped by faster approvals, although this will take time.

"We certainly expect in next couple of years to see a significant price pressure," he said.

Gisserot added GSK, which previously promised to become a "model for reform" in China, was willing to cut prices and promote technology transfer - both demands from a government anxious to secure long-term drug supplies.

With more than 30 staff employed solely to check every single expense claim, GSK is now paying a high price to ensure compliance, but Gisserot warned China's anti-bribery drive could in future snare others.

"I cannot believe the GSK case is a one-off," he said. "One way or the another this anti-corruption campaign will continue and I hope others will learn before it is too late."