GlaxoSmithKline replaces head of business in China amid bribery investigation

Against the backdrop of an ongoing government bribery probe in China, GlaxoSmithKline ($GSK) is shuffling its senior management there. Herve Gisserot is taking over. Outgoing leader Mark Reilly will be helping with GSK's response to China's tax fraud and corruption investigation, but Abbas Hussain will continue to spearhead those efforts. 

Thursday, the company announced that Gisserot, co-head of GSK's pharmaceutical business in Europe, would be taking the helm as head of business in China for Reilly, who will remain with GSK in London, The Wall Street Journal reports. Reilly left Shanghai June 27, Bloomberg reported, avoiding any potential travel restriction; officials confined GSK's finance chief, Steve Nechelput, to the country at the end of June, but his travel ban has since been lifted, the Financial Times reports.

GSK said Reilly would remain "fundamental to the team," according to the Times, though the overall response to the investigation was in the hands of Hussain, head of emerging markets for the pharma giant.

CEO Andrew Witty said Wednesday that the probe appeared focused on senior managers "potentially defrauding GSK and doing something inappropriate and illegal." He contended, however, that there is no evidence British management at GSK China was involved or even aware of the corrupt practices their Chinese counterparts were allegedly engaged in. Authorities have detained four senior Glaxo managers to date, all of them Chinese nationals, in connection with the allegations, and one of them has confessed on state television.

Separately, news emerged Thursday that Chinese authorities had detained a husband-and-wife pair who run a risk consultancy firm, of which GSK was a client until recently. As the FT reports, a U.S. national, Yingzeng Yu, was detained on July 10 along with husband and business partner Peter Humphrey, a U.K. citizen and the founder of Hong Kong-based risk advisory firm ChinaWhys. Several of their staff members were also detained, the Times says, though Reuters says it is unclear whether the detention is directly related to the Glaxo probe. Sources for the news service say ChinaWhys has also done work with other drug companies.

The detainment is just the latest in a series of actions from China to showcase the ripple effect from Glaxo outward to other pharma firms. While it's not known whether other companies are being investigated by law enforcement officials, Sanofi ($SNY), Roche ($RHHBY), Novartis ($NVS) and Merck ($MRK) have all done business with the Chinese travel agency blamed for facilitating the bribes to doctors and officials that are at the center of the probe.

- see the WSJ story (sub. req.)
- get more from the FT (sub. req.)
- read Reuters' article