GlaxoSmithKline says executives may have violated Chinese law

GlaxoSmithKline said Monday that some of its senior executives may have violated Chinese law, after four were detained by authorities earlier this month amid claims the drugmaker was involved in bribery in the country. Abbas Hussain, head of emerging markets and Asia Pacific for GlaxoSmithKline, remarked that "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."

Hussain was reportedly dispatched to China, along with two other GlaxoSmithKline executives, in response to a probe by the Ministry of Public Security into alleged bribery in the country. The company noted that Hussain met with Chinese authorities over the weekend. Details of the allegations against GlaxoSmithKline that were disclosed by Chinese police last week suggest the drugmaker transferred as much as 3 billion yuan ($489 million) to around 700 travel agencies and consultancies to facilitate bribes to government officials, doctors and hospitals in an effort to boost sales and increase drug prices.

"We have zero tolerance for any behaviour of this nature," Hussain said, noting that the company will alter its operations in the country. "We will actively look at our business model to ensure we make a significant contribution to meeting the economic, healthcare and environmental needs of China and its citizens," Hussain remarked. The executive said "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."

According to sources, GlaxoSmithKline CEO Andrew Witty will detail what action the drugmaker is taking in response to the bribery allegations when he presents quarterly results on Wednesday.

Also on Monday, AstraZeneca revealed that Chinese police recently visited its office in Shanghai and took away one sales representative for questioning. The company said the employee is the focus of a "local police matter," adding it has "no reason to believe" that the visit is "related to any other investigations."

For related analysis, see Spotlight On: China's hospital bidding process – where pharma's challenge in China begins and ends?

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