Laurie Burkitt
China on Wednesday accused GlaxoSmithKline PLC’s former China chief of ordering subordinates to commit bribery that resulted in billions of yuan in revenue.
At a press briefing, officials from China’s Ministry of Public Security alleged that the executive, U.K. national Mark Reilly, ordered his sales team and other employees to bribe hospital doctors, health care organizations and other parties on “a large scale” to boost drug sales in China.
Gao Feng, a ministry official spearheading the probe of the U.K. pharmaceutical company, said revenue that came from alleged bribery amounted to several billion yuan since Mr. Reilly joined Glaxo’s China operation in 2009. Glaxo pushed up the prices of drugs in China–in some instances as much as seven times the price compared with other countries–to fund its own bribery, Mr. Gao alleged.
Mr. Gao alleged that in previous years, Glaxo formed an emergency team to disrupt law-enforcement investigations into whether it engaged in bribery. “Glaxo’s acts of bribery penetrated all aspects of the company’s business operation,” he said.
A spokesman for the U.K. drug company didn’t immediately respond to a request for comment. Glaxo has previously said that some of its employees may have broken Chinese laws and that it is assisting the investigation.
Mr. Reilly couldn’t immediately be reached. Glaxo has said Mr. Reilly had returned to China to assist with the investigation after leaving last summer. A ministry official on Wednesday said Mr. Reilly is still in China. A spokesman for the British Consulate in Shanghai, where Glaxo’s China headquarters is located, said it is providing consular assistance.
Mr. Gao praised the U.K. drug maker, saying “it has held a responsible attitude” during the investigation and has provided assistance.
Chinese officials said they had completed the investigation and turned the matter over to prosecutors. It is “now the duty of the prosecutors and the court to deal with it,” he said.
The accusations are a major setback for the big drug maker in a market long seen as promising by the pharmaceutical industry. China has been an important source of sales growth for the company and other pharmaceutical makers in recent years.
Experts say the country’s underfunded medical system encourages widespread bribery and corruption among hospitals, staff and local governments. Other drug companies have come under official scrutiny for their pricing practices since the Glaxo investigation began.
Two other Glaxo executives, Zhang Guowei and Zhao Hongyan, were also suspected of bribing officials within the industry and commerce departments of the cities of Beijing and Shanghai, according to the official Xinhua news agency.
The two executives couldn’t immediately be reached for comment and have been unavailable since they were detained last year.
Wednesday’s announcement comes 10 months after Chinese officials detained four Glaxo employees and alleged that company staff members held fake conferences and funneled the money for expenses as bribes for doctors, hospital administrators and government officials to prescribe more drugs. Often the funds were funneled through travel agencies, officials alleged.
Authorities said in July that the company improperly transferred 3 billion Chinese yuan ($482 million) through travel agencies since 2007.
Source: marketwatch
