The race for emerging market domination may be even more competitive than we thought. U.S. federal investigators are looking into whether a host of Big Pharma companies have bribed foreign official in order to increase their performance in new markets. The Wall Street Journal obtained a letter which said the government is looking for four types of violations: "bribing government-employed doctors to purchase drugs; paying company sales agents commissions that are passed along to government doctors; paying hospital committees to approve drug purchases; and paying regulators to win drug approvals." The Foreign Corrupt Practices Act of 1977 prevents companies on U.S. stock exchanges from bribery in other countries. Questionable transactions in Brazil, China, Germany, Italy, Poland, Russia and Saudi Arabia are being probed.
As sales in the U.S., Europe and Japan slow, Big Pharma is relying on exploding emerging markets to boost its bottom line. According to the Pharmaceutical Research and Manufacturers of America, foreign sales accounted for a third ($103.4 billion) of total drug sales in 2009.
Merck, AstraZeneca, Bristol-Myers Squibb and GlaxoSmithkline are all under investigation, while SciClone Pharmaceuticals, Eli Lilly and Baxter confirm they've been contacted by SEC and Justice Department representatives. A similar investigation into medical device marketing practices resulted in settlements with several companes. The WSJ added that no pharmas have been charged and the probe may not reveal any wrongdoing.
- read the WSJ article