Glaxo denies Chinese claims of corrupt tactics
The Ministry of Public Security said on Thursday that the drugmaker had bribed doctors, hospitals and government officials and funneled illicit pay-offs through travel agencies, pharmaceutical industry associations and project financing.
The Chinese government did not name executives or give detailed figures. But it said the case involved "huge amounts of money".
The investigation appears to be part of a broad government crackdown on fraud and corruption involving foreign companies.
The announcement came about a week after the authorities raided offices and detained people working for GlaxoSmithKline in three cities, including Shanghai, according to the state-run news media.
The government findings were unexpected because GlaxoSmithKline executives had said last week an internal investigation of its China operations found no evidence of bribery or corrupt activities.
A spokesman said the company held its own investigation after a whistle-blower came forward with accusations of wrongdoing.
On Thursday a spokesman for GlaxoSmithKline said the company was willing to co-operate with the investigation and that the Chinese announcement represented the first details of the case the company had been informed about.
"We take all allegations of bribery and corruption seriously," the company said. "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."
Regulators in China are reviewing the prices and production costs of major Chinese and global drug companies in what appears to be an effort to lower drug prices.
China is one of the world's fastest-growing markets for pharmaceuticals, but the government has long held tight control.
In a country where kickbacks and bribery are common it is not unusual for major corporations to come under scrutiny from Chinese or Western regulators.
New York Times
Frequently Asked Questions about this Article…
Chinese investigators say executives from GlaxoSmithKline (GSK) admitted using bribes, kickbacks and other fraudulent means to boost drug sales, allegedly paying doctors, hospitals and government officials and funnelling illicit payments through travel agencies, industry associations and project financing. The Ministry of Public Security described the case as involving "huge amounts of money."
GSK says it is willing to cooperate with the Chinese investigation. The company previously conducted an internal probe after a whistle‑blower and reported finding no evidence of bribery or corruption; GSK also said it takes all allegations seriously and will act swiftly if evidence is provided.
According to state media and the Ministry of Public Security, authorities raided GSK offices and detained people working for the company in three cities, including Shanghai. The government announced findings as part of a broader crackdown on fraud and corruption.
The Chinese investigation reported that executives had admitted to using bribes and kickbacks, but GSK’s internal investigation had earlier found no evidence of bribery. The government did not name specific executives or give detailed figures, and GSK has said it will cooperate with authorities.
The article notes China is one of the fastest‑growing pharmaceutical markets and that regulators are reviewing drug prices and production costs. While specific business impacts aren’t detailed, regulatory scrutiny and corruption probes in a major market like China create operational and reputational risk for companies like GSK.
The investigation appears to be part of a broader government crackdown on fraud and corruption involving foreign firms. Regulators are also reviewing prices and production costs for major Chinese and global drug companies, an effort that seems aimed at lowering drug prices and tightening control over the pharmaceutical sector.
Investors should monitor official updates from GSK and Chinese authorities, company disclosures about the investigation and any legal or regulatory actions, and developments in China’s drug‑pricing and regulatory reviews. These updates will be relevant for assessing potential operational, legal and reputational impacts.
The Chinese government said the case involved "huge amounts of money" but did not provide detailed figures or name individuals. The article does not report any fines or penalties yet; it only describes raids, detentions and the ongoing investigation.
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