GSK admits: Execs ‘breached Chinese law’
pharmafile | July 22, 2013 | News story | Medical Communications, Sales and Marketing | China, GSK, bribes, scandal
A senior GlaxoSmithKline executive has admitted that some of the firm’s staff have broken the law in China as a bribery probe into the company continues.
Abbas Hussain, head of emerging markets at GSK, told Bloomberg: “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. We have zero tolerance for any behaviour of this nature.”
Hussain made the comments after meeting with government officials in Beijing over the weekend. He told the financial news group that he had a ‘very constructive meeting’ with people from the Ministry of Public Security.
But it is the Ministry that has accused the London, UK-based company of ‘economic crimes’ that includes spending 3 billion Yuan (£323 million) on laundering money through 700 travel agencies in order to bribe doctors, hospitals and trade groups.
The Public Security Ministry said in a statement over the weekend that the company’s executives: “Violated China’s laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits.”
The Ministry added that Hussain had apologised on behalf of his firm and pledged to co-operate with the investigation.
It is believed by a number of analysts and pharma executives that China has decided to crack down on this behaviour in an attempt to lower its healthcare bill.
The country has seen consistent growth every quarter for a number of years but like the rest of the world, is now starting struggle to keep those growth rates high.
The healthcare budget has now become positioned very much in its crosshairs, and could further complicate the already delicate relationship pharma has with the country.
Hussain implied that GSK would try to help this situation by potentially cutting prices: “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,” he said.
Further woe for GSK
Last week Liang Hong, the vice president of operations in China, admitted on Chinese television that he and other staff had used travel agencies to help bribe doctors, from what appeared to be a detention cell.
Mr Liang is one of four senior GSK executives being held on suspicion of economic crimes; the other three are: Zhang Guowei, a human resources director; Zhao Hongyan, a legal affairs director; and Huang Hong, a business development manager.
It has also emerged today that a British consultant, Peter Humphrey, who specialises in fraud investigations in China, has also been detained as part of the country’s probe into GlaxoSmithKline’s alleged bribery scandal.
He is believed to have been a contractor for GSK and is one of up to 10 individuals detained by representatives of the Ministry of Public Security. The reason for his detention remains unclear, although he is understood not to have been formally arrested.
According to the Financial Times GlaxoSmithKline dismissed about a hundred of its Chinese sales staff since the start of last year, due to some concerns over potential bribes offered to doctors as an incentive to prescribe GSK products.
Ben Adams
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