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May 14, 2014

Former GSK China head accused of bribing doctors, hospitals

Chinese authorities have accused Mark Reilly, former head of British drugmaker GlaxoSmithKline's China business, and two other executives of bribing hospital officials for helping boost the sales of the company's drugs thereby generating hundreds of millions of dollars in illegal revenues.

GSK headquarters

Chinese authorities have accused Mark Reilly, former head of British drugmaker GlaxoSmithKline’s China business, and two other executives of bribing hospital officials for helping boost the sales of the company’s drugs thereby generating hundreds of millions of dollars in illegal revenues.

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According to the Chinese Ministry of Public Security, police have completed a ten-month investigation into Britain’s largest drug firm.

A GSK spokesman was quoted saying that the ministry had passed the case to the Changsha People’s Procurator in Hunan, which is reviewing it.

Along with Reilly, two other Chinese executives Zhang Guowei and Zhao Hongyan were also suspected of bribing officials in the industry and commerce departments of Beijing and Shanghai, according to Xinhua.

The investigation highlighted the widespread use of payments to doctors, hospital staff and government officials by sellers of drugs and medical equipment in order to boost sales of its products.

No specific details have been disclosed on the amount of bribes alleged or exactly how much the company had supposedly illegally earned, according to Reuters.

GSK was previously accused of funnelling $482m through travel agencies to facilitate bribes to doctors and officials.

"According to the Chinese Ministry of Public Security, police have completed a ten-month investigation into Britain’s largest drug firm."

If convicted, Reilly could face a maximum sentence of life in prison for bribery in China.

Since the investigation started in June 2013, Chinese officials have said 46 people have been implicated in this corruption scandal.

Currently, the British drug maker is cooperating with authorities to deal with the charges as efficiently and privately as possible.

If the allegations are proved, the company may have violated both the UK Bribery Act and the US Foreign Corrupt Practices Act, as it is illegal for US or UK based companies to bribe government employees abroad.

In April, GSK former sales representative Jarek Wisniewiski was reported by BBC on its Panorama programme as saying that money put aside to teach patients in Poland about the drug was actually paid to doctors to prescribe more of the medicine.


Image: GlaxoSmithKline headquarters in Brentford, London, UK. Photo: courtesy of Maxwell Hamilton.

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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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