The London-based multinational drugmaker, also known as GSK, supplies key products such as vaccines in China, as well as drugs for lung disease and cancer. In 2013, the company was targeted by Chinese authorities over alleged corruption, price-fixing and quality controls.
High-powered GSK team flown in to aid China graft probe
The former head of GlaxoSmithKline (GSK) in China and a high-powered team from the drug giant's London headquarters will visit China soon to co-operate with the investigation into the company, as more details of arrests and financial and sexual bribery emerge.
In a letter sent on July 25 from GSK to the Ministry of Public Security, the London- and New York-listed firm said it would send Mark Reilly, its global audit team, security personnel and senior lawyers to Shanghai, the ministry announced yesterday.
"The company has guaranteed a quick and effective response to the Chinese investigation and will continue to develop its business in China. The Ministry of Public Security welcomes GSK's attitude and hopes GSK will restore normal operations in China as soon as possible," said the ministry.
GSK's operations in China were nearly paralysed and totally controlled by its London headquarters, while many mainland sales representatives had left the firm, Xinhua reported.
Asked if GSK's China operations had suffered, a GSK spokesman replied: "It is too early to say what the impact … will be. Both ourselves and the Ministry of Public Security are keen to maintain business continuity so our medicines can be available to our customers in China."
Since June 17, police have arrested 18 GSK employees in Zhengzhou , the capital of Henan province, reported Xinhua.
A 31-year-old GSK sales manager in Zhengzhou, identified as Mr Li, was quoted by Xinhua as describing how in early July he was told by his superiors to attend a meeting of GSK sales representatives in Zhengzhou to receive instructions on how to respond to police investigations. But Li was taken away by police before the meeting could start.
Another GSK sales representative in Zhengzhou was given an allowance of 7 per cent of sales to "improve relations with clients", Xinhua reported.
Under the guise of expenses for seminars, sales representatives used the money to pay for doctors to enjoy massage and sauna sessions, as well as to hire prostitutes, the sales representative told Xinhua. "Half the seminars were fake," she said.
The GSK spokesman said Herve Gisserot had replaced Reilly as general manager of GSK's China Pharmaceuticals business. "Herve's appointment will enable Reilly to dedicate himself to helping to direct our response to the investigation."
GSK's finance head in China, Steve Nechelput, was no longer barred from leaving China and would continue in his current role based in China, the GSK spokesman added.
"It's unusual that the Chinese government played up the investigation in state media in such a high-profile manner," said a lawyer specialising in pharmaceuticals. "Normally from my experience, compliance investigations in China used to be low-key.
"The Chinese authorities want to give a warning to foreign companies to behave in China. There is speculation that the government may want to use this investigation to push foreign companies to lower their drug prices in China," said the lawyer, who did not want to be identified.
GSK has already agreed to lower its drug prices in China.