Wednesday 17 January 2018

Chinese police quiz Glaxo sales rep as drugmaker fears staff broke law

Ben Hirschler and  Kazunori Takada

British drugmaker GlaxoSmithKline has said that some of its executives in China appeared to have broken the law in a bribery scandal, as it promised changes in its business model that would lower the cost of medicine in the country.

GSK, which employs 1,600 people here in Ireland, is the latest in a string of multinationals to be targeted by Chinese authorities over alleged corruption, price-fixing and quality controls.

Chinese police visited the Shanghai office of another British drugmaker, Astra Zeneca, a company spokeswoman said yesterday.

They arrived on Friday and took away a sales representative for questioning, she said. Today, two more AstraZeneca employees in Shanghai were taken in for questioning by Chinese police, the British drugmaker said on Tuesday.

The two individuals are line managers of the sales representative who was detained on Friday, a spokeswoman for the company said. One of the managers is continuing to help the Shanghai Public Security Bureau with their inquiries.

The spokeswoman said the company had no reason to think that the police inquiries were connected to any wider investigation.

AstraZeneca previously described the questioning of its sales representative as a local police matter that did not appear to be directly linked to allegations of corruption made against GlaxoSmithKline.

Health Minister Li Bin maintained the pressure on the drugs industry by stating that her department would place people and companies guilty of bribery on a black list and punish them.

GSK's head of emerging markets, Abbas Hussain, said his company had zero tolerance for employees who broke the law.

"Certain senior executives of GSK China, who know our systems well, appear to have acted outside of our processes and controls, which breaches Chinese law," he said in a statement.

Mr Hussain, sent to China last week to lead GSK's response to the crisis, held a meeting with the Ministry of Public Security at which he also promised to review GSK's business model.


"Savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients," Mr Hussain added.

Britain's biggest drugmaker gave no details on the changes or the extent of price cuts – but the move addresses a key issue for Beijing, which launched a probe into pricing at 60 local and international drug firms earlier this month.

GSK supplies key products such as vaccines in China, as well as drugs for lung disease and cancer.

Chinese police, who have detained four Chinese executives from GSK, last week accused the firm of bribing officials and doctors to boost sales and raise drug prices by funnelling up to three billion yuan (€370m) to travel agencies.

GSK has called the allegations "shameful".

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business