Chinese police rounded up GlaxoSmithKline employees in three cities as part of an investigation into "economic crimes," law enforcement there said in a statement. According to as-yet-unconfirmed reports from Chinese media, the detained workers include at least one foreign executive.
The news comes soon after Glaxo ($GSK) announced its own ongoing investigation of Chinese sales tactics, prompted by bribery allegations from an anonymous whistleblower. GSK salespeople allegedly had been offering speaking fees, lavish dinners and expensive trips to doctors, hoping to boost sales there. The company said it had spent four months and "used significant resources to thoroughly investigate each and every claim" from the anonymous tipster, finding "no evidence of corruption or bribery in our China business."
Apparently, Chinese authorities want to see for themselves. As AFP reports, police detained GSK workers in Changsha, Shanghai and Beijing. Last week, a cadre of plainclothes police seized documents in the Shanghai office, the news service says, citing local Internet reports.
To hear Chinese doctors and industry insiders tell it, healthcare professionals in China expect bribes and gifts. Doctors earn minimal salaries and collect the rest of their pay under the table from patients seeking better treatment and companies eager to market their wares. Some hospitals actually refuse to use particular drugs unless they receive some form of payment. The Chinese government has been trying to crack down on the practice as it reforms its healthcare system.
Glaxo is not the only Big Pharma company put on the spot by allegations of emerging-market sales shenanigans. Novartis ($NVS) recently acknowledged that it's investigating allegations that Indian sales executives had been using questionable tactics to drive sales of the diabetes drug Galvus. The Novartis sales managers allegedly padded invoices, offered extended credit and even bought the drug from wholesalers to hit their sales targets. And last year, Abbott Laboratories ($ABT) salespeople were accused of handing over gifts such as vacuum cleaners and coffee makers to persuade doctors to prescribe the company's drugs.
And meanwhile, U.S. prosecutors have been targeting drugmakers under the Foreign Corrupt Practices Act, which prohibits bribes to officials of foreign governments. Healthcare professionals employed by the state are considered to be official enough for FCPA purposes. Pfizer ($PFE) and Johnson & Johnson ($JNJ) have each settled FCPA probes, and other Big Pharma companies are under investigation. AstraZeneca ($AZN), Sanofi ($SNY) and Actavis ($ACT) were last year served with indictments associated with a Serbian bribery investigation.
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- see the AFP story