GSK Says Some Senior Executives Contravened Chinese Law

GlaxoSmithKline (GSK), which has been
accused by China’s security ministry of bribery and tax law violations
, has acknowledged that some of its senior executives appear to have violated Chinese law.

A senior executive at the pharmaceuticals group said in a statement that “certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law. We have zero tolerance for any behaviour of this nature.”

Abbas Hussain, the London-based president of GSK’s business in Europe, Japan, emerging markets and Asia Pacific, commented after meeting with China’s ministry of public security, which leads the investigation. GSK’s chief executive officer (CEO), Sir Andrew Witty, sent Hussain to China last week to lead the company’s response to allegations that the company bribed doctors, hospitals and government officials in order to sell more drugs at higher prices.

Hussain added that GSK will re-evaluate its business model and reduce its prices for Chinese consumers, ensuring its medicines are more affordable. Some reports have suggested that China’s high-profile bribery probe might have a secondary aim of pressuring GSK and its peers to reduce the prices of their drugs. Many also say that the company is being held up to send a signal to pharmaceutical industry that bribery will not be accepted in the Chinese market.

It has also been reported that GSK has briefed criminal investigators from the UK’s Serious Fraud Office (SFO) on its activities in China.

GSK’s CEO will be questioned this week on the allegations when the group releases its first half results. He is expected to tell investors that the speed of GSK’s growth in China made it hard for the company’s compliance team to monitor all its agents in the country.


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