Asia Briefing: Pharma GSK gets no relief from China woes

Tue, Oct 22, 2013, 01:00

GlaxoSmithKline’s China woes show no sign of abating with the news last week that the country’s former head of operations in China, Mark Reilly, was “assisting police with inquiries” in the anti-corruption probe that involves allegations of extensive bribery against the drugmaker.

Reports differ as to whether Mr Reilly has been stopped from leaving the country or if he had been requested to remain in China while the investigations was going on and was happy enough to do so.

Britain’s biggest drugmaker has conceded that some of its senior Chinese executives appear to have broken the law, and promised to address issues of practice in its China business.

Bribes to doctors

However, GlaxoSmithKline and the British embassy insist Reilly has not been detained. It still appears a brave decision on his part to return to China, given that he was replaced as GlaxoSmithKline’s China head on July 25th after Chinese police accused the pharma group of moving up to three billion yuan (€360 million) through travel agencies to facilitate bribes to doctors and officials.

To date, a number of Chinese employees of GSK have been detained, including four senior members of the local management team, but no foreigners as of yet.

GlaxoSmithKline’s sales in China are thought to have fallen by almost one-third since the corruption probe began, as its ability to market medicine in China has been disrupted by the event. China accounts for just 3.6 per cent of GlaxoSmithKline’s sales but with markets reaching saturation point in the West, China and Asia are seen as key future markets.

It’s not just GlaxoSmithKline – Sanofi, Novartis, AstraZeneca, Eli Lilly and Bayer have also had the Chinese police around, and there are fears the crackdown could widen.

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