Novartis brings in new CEO to clean up scandal-hit Korean branch

novartis
Novartis reassigned its Malaysia chief, Joshi Venugopal, to lead the beleagured Korean unit. (Novartis)

More than two years after Novartis parachuted in a temporary CEO for its troubled Korean branch, the Swiss drugmaker has tapped another temporary replacement. His key task? Grappling with ongoing kickback allegations.

Joshi Venugopal, who most recently headed up Novartis Malaysia and Brunei, will take the baton from acting CEO Klaus Ribbe in September, Novartis spokesman Eric Althoff confirmed to FiercePharma. Venugopal will take on the job of rebuilding Novartis’ image and business in Korea.

Ribbe, who will retire at the end of September, was more like a crisis manager, sent in April 2016 to deal with the emerging doctor kickback scandal. At that time, then-CEO Moon Hak-sun took a leave of absence and was soon indicted—together with five other senior managers—by Korean prosecutors over allegations they bribed doctors in exchange for prescriptions.

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The prosecution claims Novartis Korea used academic events sponsored by medical journals to funnel about $2.3 million in illegal payments to doctors. That criminal case is still ongoing, Novartis disclosed in its 2017 annual filing to the Securities and Exchange Commission.

Since the revelation, Korea’s Ministry of Health and Welfare fined Novartis 55 billion Korean won (about $50 million) and suspended reimbursement of Exelon and Zometa for three months. The country’s Ministry of Food and Drug Safety and the Fair Trade Commission have also slapped Novartis with separate punishments.

RELATED: Reeling from Cohen scandal, Novartis recruits Siemens veteran as new ethics chief

After an internal probe, Novartis said it “found that some overseas congress trips by healthcare professionals were funded in a way that did not fully comply with industry self-regulation standards.”

Novartis Korea’s revenue also dropped from 455.3 billion won ($407 million) in 2015 to 433.4 billion won in 2017, according to Korea Biomedical Review.

The scandal in Korea came on top of a similar one in Greece, where prosecutors accused Novartis of bribing doctors and government officials. The SEC and the Justice Department have demanded information from Novartis about those allegations.

Venugopal’s appointment comes on the heels of Novartis recruiting a new compliance officer—and in the wake of an uproar in the U.S. Earlier this year, the company landed smack in the middle of allegations against President Donald Trump’s former lawyer Michael Cohen when their $1.2 million consulting deal came to light.

Venugopal previously led the company’s operations in other Asia-Pacific countries, including Singapore, Sri Lanka, Myanmar and the Maldives.

Just last week, Siemens chief compliance officer Klaus Moosmayer signed on as Novartis' chief ethics, risk and compliance officer, a position that CEO Vas Narasimhan lifted into the executive committee in March. Moosmayer replaces Shannon Thyme Klinger, who was promoted to general counsel in May after Felix Ehrat resigned, citing his "mistake" in inking the consulting agreement with Cohen.

Editor's Note: This story has been updated to show that Joshi Venugopal will act as Novartis Korea chief ad-interim, not permanently.

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