Chinese police handed a bribery case against GlaxoSmithKline Plc's (GSK) China unit to prosecutors on allegations that the U.K.'s largest drug maker illegally paid doctors and medical associations to boost sales.
The three charges included corporate bribery, bribing non-government personnel and offering bribes to Chinese work units, a Ministry of Public Security official said at a briefing in Beijing today. Three calls.
China's 10-month probe of Glaxo hurt the drugmaker's sales in the country and spurred the company to burnish its reputation by taking steps to change how it markets drugs. Glaxo said in December it was changing the way it compensates salespeople and would stop paying doctors for giving speeches and attending medical meetings.
Police alleged that William Mark Reilly, a British national and executive of GSK China, ordered his subordinates to pay bribes, the Xinhua news agency also reported today, citing a statement from police in the city of Changsha. GlaxoSmithKline gained illegal revenue of more than 1 billion yuan ($160 million), according to Xinhua.
In June, Chinese authorities began investigating allegations that Glaxo had funneled money through local travel agencies to pay bribes to doctors in return for prescribing its drugs. They last year detained some executives on suspicion of economic crimes involving 3 billion yuan of spurious expenses and trading in sexual favors.
The bribery allegedly began in January 2009 when Reilly became chief executive of Glaxo's China operation, the Public Security official said at the briefing today. Reilly allegedly helped set up sales departments that offered bribes to doctors and medical associations to boost sales, according to the official. Glaxo also allegedly paid bribes in an effort to obstruct Chinese investigations, the official said.
In July, Glaxo said Reilly would assist the police in the bribery probe after returning to the country.
"We are aware of recent developments in the case but cannot comment whilst it is still ongoing," a spokesman for the U.K. embassy said in an e-mail. "We are in close contact with GSK."
