GSK’s risky business in China

British pharmaceutical giant GlaxoSmithKline (GSK) has been embroiled in bribery probes in China. In the last few days the Chinese authorities have revealed details of the alleged fraudulent practices at the pharma giant, even before a criminal investigation is concluded.

Yesterday (15 July), lead investigator, Gao Feng, alleged that GSK had funnelled more than RMB3bn (£323m) to doctors and government officials to persuade them to prescribe GSK drugs.

Gao claimed that, among other things, travel agencies had acted as conduits to pass bribes to government officials, doctors, hospitals and industry associations. GSK had used more than 700 travel agencies and consultancies in which to transfer hundreds of millions in bribes in the last six years, it was alleged.

The authorities have so far named the four Chinese executives arrested in connection to the bribery allegations. GSK’s China head of legal April Zhaom is believed to be among the detained executives.

GSK has appointed Beijing-based Chinese elite firm Jun He, which is ranked highly in The Lawyer Asia Pacific 150, to assist it in the ongoing investigation.

As the Chinese anti-bribery agencies are said to widen its investigation further to other pharmaceutical companies, companies and their legal advisors will surely be kept busy for the coming months.

Although the process could be painful, the end results must lead to a fairer and more transparent business environment in China in the future.