Drug manufacturer GlaxoSmithKline, under investigation on suspicion its employees bribed Chinese doctors, said Monday some of its executives may have broken the law.
GSK (NYSE: GSK), which operates its North American headquarters in RTP and employs several thousand people in the Triangle area, said its president for Asia-Pacific and emerging markets met with Chinese police officials who are investigating whether GSK employees bribed doctors and hospital administrators to prescribe its drugs.
“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,” the executive, Abbas Hussain, said in a statement.
Also, Monday, China’s Public Security Ministry reported that GSK had said its employees may have broken China’s laws after an investigation of the drugmaker for “serious economic crimes.”
Separately, Peter Humphrey, founder of a Shanghai-based company that worked with the U.K.’s largest drugmaker to organize an anti-corruption seminar, has been detained in the Chinese city since July 10, a spokeswoman for the Foreign Office in London said by phone. The spokeswoman, who asked to remain unidentified citing the department’s policy, didn’t specify whether the detention was linked to the probe into Glaxo.
Glaxo faces allegations of economic crimes involving $489 million of spurious travel and meeting expenses as well as trade in sexual favors, the ministry said last week. The drugmaker sent Hussain, who is head of emerging markets and one of its most senior executives, and two other officials to China to help with the probe, a person with knowledge of the matter said July 20.
Hussain apologized on behalf of Glaxo, the ministry said in a statement on its website today that cited an undated, recent meeting with the executive and his colleagues. The drugmaker said some of its senior executives in China “may have engaged in improper operations by escaping the company’s supervision, violating the nation’s laws,” the statement showed.
Garry Daniels, a Glaxo spokesman in Singapore, didn’t immediately respond today to a call to his mobile phone and an e-mailed request for comment. The company, which made about 1 billion pounds ($1.5 billion) of revenue in China last year, said in June that it found “no evidence of corruption or bribery in our China business” after a four-month internal investigation.
China detained four senior Glaxo executives on suspicion of economic crimes, the ministry said July 15. Its finance chief in China, Steve Nechelput, has been unable to leave the country since the end of June because of the investigation, though he hasn’t been arrested or questioned, Simon Steel, a Glaxo spokesman in London, said July 18.
Glaxo’s executives “violated China laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits,” the ministry said in today’s statement. The company pledged after the meeting to “adjust operations and lower the operational cost component in its drug prices” in China, the ministry said.
Humphrey is the founder of risk management advisory ChinaWhys, according to the consultancy’s website. ChinaWhys teamed up with Glaxo in 2004 to produce a seminar for the European Chamber of Commerce in Shanghai on fraud, corruption and intellectual property issues, according to the website.
The Foreign Office is providing consular assistance to Humphrey’s family, the spokeswoman said. Calls to a mobile number for the Shanghai police press office weren’t answered.
State-owned China Central Television aired a prime-time segment on July 16 detailing how Glaxo executives used travel centers including Shanghai Linjiang International Travel Agency to funnel bribes to government officials, hospitals and doctors.
The probe may widen, given that at least six other global drugmakers, including Merck & Co., Novartis AG, Roche Holding AG and Sanofi, used the same travel agency to make arrangements for events and conferences in the last three years, the New York Times reported today, citing documents it obtained.