China's corruption watchdogs eye 4 more drugmakers

The news about GlaxoSmithKline's ($GSK) activities in China is getting more dramatic by the day. But now, the British drugmaker can take comfort in the fact that it's not alone. Chinese anti-corruption officials are targeting four more major drugmakers, Bloomberg reports.

The latest on Glaxo: A top local official, operations manager Liang Hong, went on Chinese TV to confess his crimes. As The Telegraph reports, he appeared to be speaking from his detention cell, unshaven and disheveled. He admitted to funneling millions of yuan through Shanghai Linjiang International Travel Agency to mask company spending. "Some expenses cannot be reimbursed through GSK China," he said. "For example, the money spent on maintaining good relations with the government."

Meanwhile, Chinese enforcers had suggested that other pharma companies were using some of the same tactics to boost their businesses in the country. Gao Feng, who heads up economic crime investigations for the Chinese Public Security Ministry, said several drugmakers had financial ties to the travel agencies embroiled in the GSK probe but declined to say much more. Now, a Hong Kong lawyer has said investigators are officially sifting the evidence of possible corruption at several multinational firms.

"We are aware of four pharmaceutical companies who are facing" investigation by Chinese anti-corruption units, said Wendy Wysong, who heads up the anti-corruption practice at the law firm Clifford Chance (as quoted by Bloomberg). She wouldn't identify the companies involved.

Analysts figure that the high-profile Chinese probe won't have much effect on the company financially. Few investors seem worried, they said. The news may actually do more damage to the company's reputation outside of China, where GSK has made headlines--and agreed to pay billions of dollars--for off-label marketing crimes and shoddy manufacturing.

As Bloomberg notes, Chinese police usually don't speak publicly about ongoing probes, particularly to foreign media. But in this case, the government appears eager to roll out details of its investigations. After totting up evidence against GSK, Gao moved on to chastise other drugmakers: "As to whether these companies are also involved in illegal dealings, you can go and ask them," Bloomberg reports. "Of course they won't answer. But you can ask them one question: 'Can you sleep well at night?'"

- read the Bloomberg story
- get more from The Telegraph

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