Hangzhou crackdown puts pressure on GlaxoSmithKline and other drugmakers

Hangzhou is cracking down on graft in the health care sector, according to an internal memorandum from the local government, putting more pressure on global drugmakers operating on the mainland.

This month, executives at British drugmaker GlaxoSmithKline were charged with corruption. GSK said it was cooperating with the authorities.

Swiss drugmaker Roche last week said it was cooperating with the authorities after the anti-graft watchdog visited its Hangzhou offices.

The Hangzhou crackdown is another sign that mainland authorities are getting increasingly active in the fight against graft in the mainland's health care sector, a concern for drugmakers and medical device firms targeting the 1.4 billion population.

Industry and legal sources said probes into the sector were likely to rise in the wake of the investigation against GSK, putting increasing downward pressure on profits and sales.

The city's health bureau has ordered health care departments to carry out internal compliance probes before the end of June and to report any kickbacks they had received, the 21st Century Business Herald newspaper reported yesterday, citing the internal document from the ministry.