Glaxo faces investigation into alleged corruption in China

Executives 'confessed' to offering bribes to officials to raise the price of medicines

Senior executives at Britain's biggest drug maker, GlaxoSmithKline, are facing a criminal investigation in China for allegedly bribing officials as the company stands accused of being at the centre of a "huge" scheme to raise drug prices in the country.

The Ministry of Public Security claimed the executives had confessed, under interrogation by Chinese officials, to handing government workers and hospital personnel cash and perks for prescribing medications.

It said an investigation in three of the country's biggest cities, Shanghai, Changsha and Zhengzhou, had found that GSK tried to increase medicine prices by bribing doctors, hospitals, government officials and pharmaceutical industry associations.

The ministry said GSK executives had admitted to paying and accepting bribes via conference rebates and project fees. "After initial questioning, the suspects have admitted to the crimes and the investigation is ongoing," it said.

The claims could be a major blow for the FTSE 100 drugs giant, which has been pushing its Chinese business for major growth as key medicines fall out of patent in the West. Glaxo earned £875m from China in 2012, and has five manufacturing plants in the country, employing 5,000.

A spokesman for GSK said the public statement was the first it had heard of the allegations. He added that the company was "willing to co-operate with the authorities in this inquiry".

He said: "We take all allegations of bribery and corruption seriously. We continuously monitor our businesses to ensure they meet our strict compliance procedures. We have done this in China and found no evidence of bribery or corruption of doctors or government officials. However, if evidence of such activity is provided, we will act swiftly on it."

GSK has faced heavy scrutiny of its work in China on several fronts this week. Officials in Beijing are investigating potential price-fixing by GSK and other drug makers, including its rivals Merck, Novartis and Baxter.

They faced claims that its staff used improper tactics to market Botox in China. GSK said it had found "no evidence to support allegations" that staff handed doctors cash and other kickbacks for prescribing Botox.

'Gifts' that carry risks

On a trip to Hong Kong last year, I had dinner with a bunch of high-flying legal expats who told me how business is done across China.

How to accept a business card (two hands, look very excited), the imperativeness of small talk – and the huge importance of gifts. "They're part of how we do business," I was told.

Nowhere are those gifts more important in China than in its healthcare system, where doctors' low salaries are topped up by payments from patients and bribes from equipment-makers and drug suppliers. There are big prizes for cracking China – which drug makers need as Western markets flatten – but major risks too.

Just ask the Australian citizen Stern Hu and the other ex-Rio Tinto employees currently languishing in Chinese prisons after being charged with taking bribes. Hu was sentenced to a decade in a shared cell, sleeping on communal wooden boards.

Lucy Tobin

PROMOTED VIDEO
News
Teeth should be brushed twice a day to prevent tooth decay
education
News
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London