Source: Yahoo News
BEIJING—China unveiled a litany of bribery and misconduct allegations against GlaxoSmithKline PLC, a move that industry experts said could presage a broader crackdown in a lucrative market for pharmaceutical and medical companies.
At a news conference on Monday, officials within the Ministry of Public Security’s economic crime investigation unit said four high-level Chinese Glaxo executives have been detained over allegations that they “severely violated” Chinese law. The officials accused Glaxo staffers of using travel agencies as vehicles to bribe government officials, hospitals and doctors in order to sell more drugs at higher prices.
“A large part of their strategy for sales and marketing has been to conspire and encourage the possibility of commercial bribery,” said Gao Feng, a ministry official spearheading the probe of the U.K. pharmaceutical company.
Mr. Gao said Glaxo and the travel agencies exchanged three billion Chinese yuan ($489 million) between them since 2007. Mr. Gao didn’t make clear whether any of that money was used for legitimate business purposes. He alleged that the travel agencies also offered what he called sexual bribes to senior Glaxo executives to keep the company’s business.
In a statement Monday, Glaxo said it is deeply “concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct.” It added that “GSK has zero tolerance for any behaviour of this nature” and that the alleged behavior would be a breach of the company’s standards.
Health care is a fast-growing business in China, where increasingly affluent consumers demand better care and the government is under public pressure to widen a traditionally skimpy social safety net. China’s health-care spending is poised to triple to $1 trillion by 2020, according to McKinsey & Co. Sales of pharmaceuticals in China reached $82 billion in 2012, up 18.2% from a year earlier, according to risk-assessment firm Business Monitor International.
China Bans Glaxo Finance Chief From Leaving Country
Source: The Wall Street Journal
Chinese authorities investigating alleged bribery by pharmaceutical giant GlaxoSmithKline have banned the company’s British finance chief in China from leaving the country, according to people familiar with the matter.
The travel ban on Steve Nechelput, vice president for finance in China, is connected to the bribery investigation. However, Mr. Nechelput hasn’t been detained or arrested, one person familiar with the matter said. He is free to move around the country but isn’t allowed to leave China, this person added.
China has accused Glaxo of using travel agencies as vehicles to bribe government officials, hospitals and doctors in order to sell more drugs at higher prices. Glaxo has said it is deeply “concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct.”