The Ministry of Public Security said people working for the drug maker had bribed doctors, hospitals and government officials and funneled illicit payoffs through travel agencies, pharmaceutical industry associations and project financing.
The government did not name any executives or detailed figures. But it said the case involved “huge amounts of money.”
The investigation appears to be part of a broad government crackdown on fraud and corruption involving foreign companies.
The announcement came about a week after the authorities raided offices and detained people working for GlaxoSmithKline in three different cities, including Shanghai, according to the state-run news media.
The government findings released Thursday were unexpected because executives at GlaxoSmithKline had said just last week that an internal investigation of its China operations found no evidence of bribery or corrupt activities.
A spokesman for the company said last week that the company had initiated its own investigation after a whistle-blower at the company came forward this year with accusations of wrongdoing in the China operation.
On Thursday, a spokesman for GlaxoSmithKline said that the company was willing to cooperate with the investigation and that the Chinese announcement represented the first details of the case the company had been informed about.
The company also released a statement saying: “We take all allegations of bribery and corruption seriously. We continuously monitor our businesses to ensure they meet our strict compliance procedures. We have done this in China and found no evidence of bribery or corruption of doctors or government officials. However, if evidence of such activity is provided we will act swiftly on it.”
Like many other large pharmaceutical companies, Glaxo has been investing significantly in China and other emerging markets, seeking to capitalize on a growing middle class that can increasingly afford to pay for prescription drugs.
Although China still accounts for a small fraction of Glaxo’s business, sales in the country grew 17 percent in 2012, to $1.2 billion.
Sales in emerging markets accounted for about a quarter of the company’s business in 2012.
Earlier this year, The Wall Street Journal reported that a whistle-blower had shared some information with the newspaper and claimed that executives at the company had bribed doctors and hospitals.
It is unclear whether the investigation by the Ministry of Public Security is linked to the whistle-blower.
Regulators in China are reviewing the prices and production costs of major Chinese and global drug companies in what appears to be an effort to lower drug prices.
Feng Zhanchun, who specializes in public health at Huazhong University of Science and Technology in Wuhan, China, said that the Chinese pharmaceutical market was struggling to adapt to market forces.
“Economic crimes, including commercial bribery and kickbacks, are one of the negative results generated in the transitional period in China,” he said in a telephone interview. “In the midst of a transition from a planned economy to a market economy, laws and regulations are not fully in place, and medical institutions have no perfect operational mechanisms.”
China is one of the world’s fastest-growing markets for pharmaceutical products, but the government has long held tight control over pricing of certain drugs.
Still, in a country where kickbacks are common and the sales channels for many products are swayed by bribery, travel vouchers and payoffs, it is not unusual for major corporations to come under scrutiny from Chinese or Western regulators.
Stephanie Yifan Yang contributed research.
Article source: http://www.nytimes.com/2013/07/12/business/global/china-accuses-glaxosmithkline-of-corruption.html?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.