Now China’s pharma firms under spotlight

Chia Tai Tianqing Pharmaceutical Group

The net cast out by Chinese authorities over the country’s pharma industry may be about to ensnare its first domestic pharma company as part of an alleged corruption probe.

State-owned TV channel China Central Television reported that sales teams at Chia Tai Tianqing Pharmaceutical Group - which is 60%-owned by Chinese firm Sino Biopharmaceutical – had given doctors trips to Taiwan and Thailand in return for their attendance at an event.

This could be considered illegal activity, and Sino said it was investigating the allegations into what it calls ‘the incident’.

“To the best knowledge of the board, the board is not aware of any member of the group being subject to investigation by the relevant governmental authorities,” the company said.

“The board is currently conducting further investigation as to whether certain staff members of an indirect subsidiary of the company were actually involved in the incident and the company will publish an announcement containing the results of the further investigation once such results are available,” its statement went on.

To further distance itself, Sino added: “The board and the senior management members of the group have not been involved in, and have not authorized any of the group’s employees to be involved in, the incident.”

While nothing has been proved, this latest twist in China’s anti-corruption saga may be greeted with a wry smile by western pharma companies, many of whom have been investigated in recent months.

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

Chinese police have contradicted GSK by suggesting the company knew about the alleged use of travel agencies to handle £320 million of kickbacks to doctors. GSK denies this.

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.

Liu Yaming, drugs analyst at Founder Securities, told the Financial Times: “The current moves have shown the new government’s determination [to crack down on commercial bribery] and it’s promising. But if we cannot form a system to allow the doctors to live on their skills, it is hard to eliminate the link between doctors and [incentives for] the sales of drugs.”

Adam Hill