Beijing widens probe into kickbacks by foreign drug companies

PUBLISHED : Friday, 19 July, 2013, 2:51pm
UPDATED : Saturday, 20 July, 2013, 3:58am

The central government's crackdown on the pharmaceutical sector has widened beyond UK drug giant GlaxoSmithKline (GSK) to include more foreign and domestic firms.

The State Administration of Industry and Commerce (SAIC) visited the Shanghai office of Belgian drug firm UCB this week, a UCB spokeswoman said. "Shanghai is one of our main offices in China."

However, she played down the incident, saying "it is normal practice" for the market watchdog to visit UCB, and that SAIC would probably continue to do so in future.

"All our Chinese activities are operating normally," said the UCB spokeswoman, declining to provide a reason for SAIC's visit.

Two drug firms listed on the New York Stock Exchange, Merck and Baxter International, and Japanese drug firm Astellas are being investigated by the Chinese authorities, said a source familiar with the matter.

Asked whether Merck, or MSD as it is known outside North America, was being investigated in China, the US company's spokeswoman said: "No, MSD has not been contacted by the Ministry of Public Security."

An Astellas spokesman said the company was not under investigation by the Chinese government. Baxter did not reply to queries from the South China Morning Post.

Police visited the offices of Swiss drug maker Roche and US drug giant Pfizer in Wuhan , capital of Hubei province, said a Wuhan police source. More foreign drug companies are expected to come under investigation, the source added.

A Pfizer spokeswoman said: "We have not been contacted by the Ministry of Public Security regarding this matter."

A Roche spokeswoman said: "We are not aware of probes in China against Roche."

Following the government's probe into GSK, the London- and New York-listed firm has sent a delegation to China, headed by Abbas Hussein, the company's president of Europe and emerging markets, said a GSK spokesman. Accompanying Hussein are GSK's global head of internal audit and GSK deputy chief counsel for China, the company's spokesman added, declining to name the other two executives.

Meanwhile, Shanghai Linjiang International Travel Agency has been ordered to halt its business over "illegal activities", including fake billing, the Shanghai tourism administration said.

The Chinese authorities had alleged GSK used travel agencies such as Linjiang to funnel nearly three billion yuan (HK$3.8 billion) in kickbacks to doctors, hospitals and other groups.

Four Chinese executives of GSK have been detained, while Steve Nechelput, the British head of GSK's China finance operation, has been prohibited from leaving China.

Additional reporting by George Chen