Update

GSK Admits Some Senior Executives May Have Breached China Laws

By Zachary Brennan

- Last updated on GMT

GSK Admits Some Senior Executives May Have Breached China Laws

Related tags China

GlaxoSmithKline (GSK) announced Monday a few of its senior executives may have breached China law as reports of a bribery scandal continue to surface. 

Abbas Hussain, president of GSK’s International arm said in a statement after a meeting with the Chinese Ministry of Public Security that “certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law​.”

Hussain added: “I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists. We will continue to work together with the MPS and we will take all necessary actions required as this investigation progresses​.”

And in what might be seen as part of an effort to appease Chinese officials, Hussain noted that “savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients​."

Backdrop

The lead up to GSK’s announcement Monday comes after a number of media outlets reported that the company had bribed officials and doctors to boost sales​ by siphoning more than $450M to travel agencies. The company also reportedly fired dozens of sales representatives in China over the last year.

The travel agency, known as the Shanghai Linjiang International Travel Agency, has reportedly been shut down, according to the Agence France-Presse​.

On Wednesday, GSK will release its quarterly earnings and CEO Andrew Witty is expected to speak about the situation in China during the conference call.

Other Drugmakers

AstraZeneca spokeswoman Michele Meixell confirmed to us today that one of its employees was taken for questioning by a local Chinese police bureau.

We believe that this investigation relates to an individual case and while we have not yet received an update from the Public Security Bureau, we have no reason to believe it’s related to any other investigations​,” she said.

Officials from the State Administration for Industry and Commerce (SAIC), one of the country’s anti-trust regulators, also visited Belgian drugmaker UCB last week.

Other drugmakers, including Roche, Merck and Novartis have supposedly used the same travel agency that GSK allegedly used to funnel the payments to doctors and officials, according to Reuters​.

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