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 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.
Frequently Asked Questions about this Article…
According to the article, Chinese investigators say GlaxoSmithKline executives admitted using bribes, kickbacks and other fraudulent means to boost drug sales, allegedly paying doctors, hospitals and government officials and funneling illicit payments through travel agencies, industry associations and project financing. The Chinese authorities described the case as involving "huge amounts of money" but did not name individuals or give detailed figures.
The article reports conflicting accounts: Chinese investigators said executives admitted corrupt tactics, while GlaxoSmithKline says its own internal probe — launched after a whistle‑blower complaint — found no evidence of bribery or corruption in China. The company says it takes allegations seriously and is willing to cooperate with the investigation.
The article notes that Chinese authorities raided offices and detained people working for GlaxoSmithKline in three cities, including Shanghai, and that the Ministry of Public Security publicly announced the findings as part of a broader crackdown on fraud and corruption involving foreign companies.
The article highlights that China is one of the fastest‑growing markets for pharmaceuticals but that the government tightly controls the sector. A government crackdown on fraud, corruption and drug pricing can create regulatory and reputational risks for global drugmakers operating there, which is important for investors to monitor.
The article does not provide definitive outcomes, but it says Chinese regulators are reviewing prices and production costs of major domestic and global drug companies as part of efforts to lower drug prices. Such regulatory attention could pose operational or regulatory challenges for companies like GlaxoSmithKline in China.
Per the article, GlaxoSmithKline conducted an internal investigation after a whistle‑blower came forward, reported no evidence of corrupt activity in China, and has said it will cooperate with Chinese authorities and act swiftly if evidence of bribery or corruption is provided.
The article states that in China kickbacks and bribery are common and that major corporations are often subject to scrutiny from Chinese or Western regulators. For investors, that means companies operating in China face elevated compliance and legal risk that can affect performance and reputation.
The article suggests investors should monitor official announcements from the Chinese Ministry of Public Security and GlaxoSmithKline, watch for regulatory moves around drug pricing and production costs, and keep an eye on further details about the investigation since the government has provided only initial information so far.
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