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Pharma giant GlaxoSmithKline faces bribery probe in China
Time: 2016-11-4 9:52:19

Britain’s biggest drugmaker, GlaxoSmithKline is seemingly in trouble in China - one of its key focus markets.

The Ministry of Public Security said on Monday that GSK China is under investigation for using travel agencies and consultancies as vehicles to bribe government officials in order to boost sales prices of its products in the country.

Since the end of June, four senior Chinese executives of GlaxoSmithKline have been detained for bribes. But the scandal could have wider implications.

The trigger why the scandal came to light was a local travel agency, which barely ran tourism projects but earnt hundreds of millions of yuan per year through its business with the drugmaker.

"GlaxoSmithKline is a multinational company. If its employees are engaged in illegal activities, it will be punished both in China and its home country. In order to avoid any risks, the company chose to cash out money through travel agencies." Policeman in GSK probe said.

According to the investigation, GSK China had transferred about 3 billion yuan, or 490 million U.S. dollars to over 700 travel agencies and companies. The money finally ran into the pockets of officials and doctors. The costs have not been paid by GSK, but are being passed on to patients.

"The bribed money makes up nearly 20 to 30 percent of the price of the medicine." Liang Hong, Vice-President of Operation of GlaxoSmithKline said.

Analysts say the probe into GSK is only the tip of the iceberg of drugmakers’ bribery activities in China. If these can’t be stopped, the prices of pharmaceuticals are unlikely to decrease to reasonable levels any time soon.