Four senior executives of British multi-national pharmaceutical giant GlaxoSmithKline (GSK) have been detained by Chinese police for alleged economic offences like bribery and tax evasion, state media reported today.
The executives of GSK (China) Investment Co. Ltd., identified by their Chinese names, include Vice-President and operation manager Liang Hong, Vice-President and human resources director Zhang Guowei, legal affairs director Zhao Hongyan, and business development manager Huang Hong, Xinhua news agency reported.
The four were once dubbed the GSK China’s “quadriga,” the report said which also alleged malpractices like manipulating prices of the medicines in collusion with officials.
Liang, who supervises about 3,000 medical representatives across China to deal with hospitals and doctors said he had been “in contact with” senior Government officials and medical experts.
He said he was authorised to approve an annual budget up to hundreds of millions of yuan.
Medicine prices are regulated by the Government in China and patients rarely have a say in medical pricing.
“If we want to sell a medicine in China, we should handle the procedures with the drug administration, price regulator, social security authority, local Governments as well as hospitals and doctors, and all these procedures may give rise to corruption risks,” Liang said.
The costs for the large bribes will eventually be transferred to patients through higher medicine prices, Liang said, adding that it is estimated that such extra costs may account for up to 30 per cent of medicine prices.
A medicine that cost only 30 yuan to produce could end up setting patients back 300 yuan, he said.
The Ministry of Public Security announced last week that some senior executives from GSK China were being investigated for suspected bribery and tax-related violations.
The suspects are believed to have offered large bribes to government officials, medical industry associations and foundations, hospitals and doctors in order to expand the company’s market in China and raise the price of its medicine.
Most of the bribes are thought to have been given through travel agencies, the report said.
The Beijing News newspaper said in a separate report that over 20 people, including the four executives, were being held in connection with the investigation, which came to light earlier this month.
The police have also held and questioned the corporate representative of a travel agency suspected of being involved in the case, it quoted an “investigation team”.