Sanofi 'confident' about China ops as officials launch bribery probe

Sanofi has joined GlaxoSmithKline under China's official corruption microscope. According to the state news service Xinhua, authorities are investigating allegations that the French drugmaker bribed more than 500 doctors. Sanofi ($SNY) says it is cooperating with the authorities and "remains confident" about its operations in China.

Beijing municipal officials are teaming up with corruption watchdogs to probe accusations raised last week by an anonymous whistleblower, Xinhua says. According to the tipster, Sanofi spent almost $280,000 on bribes to increase sales of two of its hypertension drugs.

Sanofi's money allegedly changed hands in 2007. At the time, the payments were deemed "research grants" and pegged to post-marketing surveillance of the two drugs, identified in Chinese media as Irbesartan and a related combination pill. In a statement, Sanofi says it takes the allegations seriously and has "zero tolerance" for unethical behavior.

The investigation follows more than a month of pharma surveillance in China. In early July, Chinese officials detained four GlaxoSmithKline ($GSK) managers on suspicion of "economic crimes," since identified as almost $480 million in alleged bribes disguised as payments to local travel agencies. The State Administration of Industry and Commerce said the government was probing the entire industry for bribery and pricing violations. Over the past few weeks, officials of one kind or another have visited the Belgian drugmaker UCB, Eli Lilly ($LLY), AstraZeneca ($AZN), Lundbeck and Novo Nordisk ($NVO), in addition to Glaxo and Sanofi.

In Sanofi's case, Chinese authorities are focusing on whether the payments related to actual research, with associated patient names and medical reports, Xinhua said. "How to define the boundary between a 'clinical research grant' and bribery is key to the case," the news service reported, citing experts.

More is to come, apparently. At a Friday press conference, a National Health and Family Planning Commission official said the agency would intensify its efforts to curb bribery in the pharma industry and healthcare sector. According to spokesman Deng Haihua--as quoted by Xinhua--the commission plans to blacklist drugmakers and individuals involved in bribery.

Some market experts figure that China's corruption probes are part of an arm-twisting effort to save money on drugs. Glaxo's case seems to illustrate the point: As the investigation intensified, the company's top emerging markets executive flew in for damage control and quickly announced price cuts for its products. Whether Sanofi will follow suit remains to be seen. With the threat of blacklisting, even a whiff of bribery could give officials reason--and companies motivation--to force prices downward.

- see the statement from Sanofi
- get the news from Xinhua

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