Asia Briefing: GlaxoSmithKline caught up in corruption investigation

Tue, Jul 23, 2013, 01:00

China is stepping up its action against corrupt health officials but the current crackdown involving executives of Glaxo- SmithKline is the highest profile international case since the campaign began.

Glaxo, the maker of the world’s top-selling drug, the asthma treatment Seretide, has had four senior executives detained as part of a probe involving three billion yuan (€370 million) of travel and meeting expenses, and trade in sexual favours, according to the Chinese police.

State broadcaster China Central Television aired a segment on July 16th showing how Glaxo executives channelled bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and to raise the price of its medicines in China.

The report featured Liang Hong, operations manager for Glaxo China, explaining how executives passed bribes to drug regulators, pricing officials at the National Development and Reform Commission (NDRC) and hospital officials. Mr Liang is one of four Glaxo executives in police custody, CCTV reported.


Finance chief
The company’s China boss Mark Reilly left the country on June 27th after his colleagues were detained, but its finance chief in China is not allowed to do so. Steve Nechelput has not been questioned or arrested and is not being detained, but he is required to stay in China.

China has made strong advances in healthcare since the 1980s, modernising its hospitals, adding 10 years to life expectancy, halving infant mortality and eliminating diseases like polio. However, there is widespread anger about the cost of drugs and many blame corruption for this, hence the current crackdown.

The NDRC, China’s top economic planning agency, is investigating the costs and prices of drug manufacturers including Glaxo, Merck, Novartis and Baxter to improve the pricing system for medicines.

Former chief drug regulator Zheng Xiaoyu was executed in 2007 for taking bribes as part of a crackdown on fake medicine, but that seems to have made little difference.