China widens pharma graft probe to at least 4 MNCs

BEIJING - China is investigating at least four multinational drugmakers as it widens its probe of GlaxoSmithKline, according to a lawyer in Hong Kong whose firm advises companies on cross-border anti-corruption.

The investigations point to an increased targeting of the pharmaceutical industry in corruption probes as the world's most populous country faces rising health-care costs and seeks to lower drug prices.

"We are aware of four pharmaceutical companies who are facing" investigation by local anti-corruption units, said Ms Wendy Wysong, head of anti-corruption practice in Asia-Pacific at law firm Clifford Chance. She declined to identify the companies.

On Monday, Chinese officials said Glaxo used travel agencies as a conduit for bribes, that company executives received "sexual bribes", and that other drugmakers have transferred money to the agencies.

China, the world's fastest-growing market for medicines, has become an important target for the pharmaceutical industry as more and more best-selling therapies have gone off patent.

Glaxo's revenue from China increased 17 per cent last year to £759 million (S$1.4 billion), while product sales for AstraZeneca rose 20 per cent in China to US$1.5 billion (S$1.9 billion).

Pfizer and Merck, the two biggest US drugmakers, together employ about 14,000 people in China.

AstraZeneca, Pfizer and Merck have not been identified by China as targets of their probe.

The results of the probes may interest the US government.

Its Foreign Corrupt Practices Act bars corporate employees or their agents from paying bribes to government officials to obtain or retain business or to secure an improper advantage.

Glaxo is among several drugmakers that have already been contacted by US authorities in an ongoing industry-wide probe.