Drug firms seek expert advice as unease spreads in wake of GlaxoSmithKline affair

PUBLISHED : Tuesday, 30 July, 2013, 12:00am
UPDATED : Tuesday, 30 July, 2013, 7:38am

Beijing's crackdown on the drug industry has spurred international pharmaceutical companies to seek advice from risk consultancy firms, who are themselves uneasy about the ongoing investigations.

The government has detained at least four senior Chinese GlaxoSmithKline (GSK) executives, as well as 18 GSK employees, in its investigation into suspected bribery by the UK pharmaceutical giant.

"We have definitely seen a surge in inquiries recently from companies operating in the health care sector," said Ben Wootliff, Greater China and North Asia corporate inquiries director for Control Risks, a risk consultancy firm.

"Clients are increasingly worried that the due diligence they have done on third-party suppliers, including travel agents and marketing firms, is insufficient," said Wootliff.

"It's not just the health care sector that is worried. Any firm which has a big sales operation in China is now more concerned."

Hugo Williamson, managing director of Risk Resolution, said his firm had been approached by a number of drug companies in recent weeks seeking due diligence into mainland partners, sales agents, distributors and related parties.

"We are also looking at a number of firms' anti-corruption procedures to examine if they are suitable, given the changing global regulations and evolving situation in China," Williamson said.

But risk consultancy can itself be a risky business. The founders of Shanghai risk consultancy firm ChinaWays, Peter Humphrey and his wife Yu Yingzeng, were detained recently, reportedly as part of the GSK investigation.

Three consultants the Post spoke to declined to comment on the pair's detention.

During a visit to GSK's plants in Dongli district and Binhai New District in Tianjin , security staff told the Post the plants were operating normally. Operations at GSK's research and development centre in Shanghai also appeared normal when the Post visited it.

Some staff outside having lunch said they were nervous about the company's prospects in China.

"The employees are feeling uneasy about the company's future but we hope our work won't be affected," one employee told the Post.