GlaxoSmithKline accused of bribery in China

An employee of British drug firm GlaxoSmithKline (GSK) enters their office headquarters in Shanghai on July 1, 2013.

China’s security ministry claims executives of the British drug company GlaxoSmithKline have confessed to bribery charges. The executives are accused of offering bribes to Chinese government officials, medical associations, and doctors in order to boost sales and push up prices. 

Glaxo says it monitors staff behavior continuously and has found no evidence of bribery or corruption. But the company is clearly coming under intense pressure from the Chinese authorities on several of fronts. Glaxo is one of a number of big multinational drug firms already under investigation in China over alleged price fixing.

Health insurance coverage is expanding rapidly in China and as a result the country’s healthcare market is growing faster than anywhere else.

Gus Ando of IHS Global Insight says Beijing -- like many other governments -- is battling to keep a lid on drug prices.

“As soon as you expand insurance and expand coverage, you’re going to have to think about how on earth do you control the costs of adding so many people to their healthcare insurance scheme. And that immediately puts pressure on pharmaceutical prices,” he says.

Ando points out that China is also ploughing billions into building up the country’s home-grown pharmaceutical industry which has a poor reputation for drug safety and does not enjoy widespread public trust. 

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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