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GSK has ‘serious concerns’ about China

Published on 09/09/13 at 10:16am
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GlaxoSmithKline is said to be thinking about abandoning China altogether as the company continues to co-operate with the country’s authorities over accusations of bribery.

Last week Chinese police upped the ante by suggesting that - contrary to GSK’s often-stated position - the company knew about the alleged use of travel agencies to handle £320 million of kickbacks to doctors.

According to a report in the Sunday Telegraph, a source close to the company said that GSK now had ‘serious concerns’ over its future in China.

“A senior China-based industry figure said GSK could pull out of the country because of the size of the fine it faces and the increasing difficulty of doing business,” the report said.

GSK could not be reached for comment.

However, it is possible that a threat of withdrawal might be part of a negotiating position as GSK seeks to mitigate the fine which the Chinese government seems likely to impose.

The firm has already admitted that these allegations involved senior Chinese staff, but added that they worked around its systems, defrauding the company as well as the Chinese healthcare system.

Chief executive Sir Andrew Witty said that he and the head office ‘had no knowledge’ of the situation. “This looks like a number of individuals that have worked outside our systems,” he said. “It would have been difficult to find using our controls.”

Sir Andrew continued: “The alleged activities are not what we expect of our people and are totally contrary to our values. Clearly, we are likely to see some impact to our performance in China as a result of the current investigation, but it is too early to quantify the extent of this.”

Four senior GSK executives have been detained in the country with others barred from leaving.

The European Union Chamber of Commerce in China’s pharma working group suggested the authorities might be trying to ‘frighten’ pharma companies and said western firms were being discriminated against.

GSK is the subject of the highest profile investigation into bribery in China although Sanofi and other companies are also under the microscope.

Adam Hill

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