GSK ‘may not face corporate charges’
pharmafile | November 5, 2013 | News story | Medical Communications, Sales and Marketing | China, GSK, bribery
GlaxoSmithKline is unlikely to face a company-wide charge for corruption following investigations by authorities in China according to reports.
The company, under scrutiny over the alleged use of travel agencies to handle £320 million of kickbacks to doctors, has already described the actions of some of its staff in China as ‘shameful’.
But media reports citing ‘legal and industry’ sources, suggest that GSK itself is unlikely to be brought to book as a corporate entity – although Chinese individuals, several of whom were detained in the country, may face prosecution. The company is not commenting.
But while this apparent development may be some relief to GSK, it still faces a thorny problem: third quarter sales this year in China dropped 61% year-on-year, suggesting that the probe has tarnished more than its image there.
Other western pharma companies have fared much better in China in third quarter showings: Novartis saw sales rise 18% year-on-year while those of fellow Swiss manufacturer Roche jumped 23 per cent.
Speaking in July, GSK chief executive Sir Andrew Witty said the staff involved in the alleged corruption worked around corporate systems, defrauding the company as well as the Chinese healthcare system.
GSK has always maintained it had no knowledge of the situation. “This looks like a number of individuals that have worked outside our systems,” Sir Andrew said. “It would have been difficult to find using our controls.”
Chinese police suggested more recently that the company did know about the alleged corruption, with state news agency Xinhua reporting: “As the investigation is moving on, it is becoming clear that it is organised by GSK China rather than drug salespeople’s individual behaviour.”
The Xinhua report added: “When investigated, the company passed the buck to sales force. But the police investigation has found that GSK China went through the motions in internal auditing so as not to discover these violations.”
Analysts and pharma executives believe China is turning up the heat on bribery in part as an attempt to lower its healthcare bill.
Adam Hill
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