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pub_date:4 top execs held as Beijing cracks down on briberyFOUR top executives of British drug firm GlaxoSmithKline (GSK) have been detained in China for alleged bribery offences.儲存倉 The move could herald a shakeout in the Chinese drug industry and hit foreign players.China's new leadership has waged a fierce anti-corruption campaign since late last year and the pharmaceutical industry is notorious for driving sales with kickbacks and handouts. The GSK case was hailed as the first publicly known prosecution of bribery involving a drug company operating in China by the Public Security authorities. Two unnamed foreign drug companies are also reportedly under investigation.The four GSK managers, whose responsibilities included operations, human resources, legal affairs and business development, had committed "serious" economic crimes, Xinhua news agency said. The Beijing News added that more than 20 people, including the four executives, were being held in connection with the investigation. Others were pharmaceutical and travel industry officials, it said, with at least four travel agencies involved.Chinese authorities said last week that GSK staff had bribed government officials, pharmaceutical industry groups, hospitals and doctors to help boost sales of their products and increase prices for drugs. The bribes were given directly or made through travel agencies and project sponsorship, the ministry of public security had said earlier.Pharmaceutical firms in China have been known to bribe doctors and hospitals to use their products. At the same time, GSK executives allegedly took kickbacks from travel agencies in return for choosing them to organise conferences, said the ministry, which is in charge of China's police.Gao Feng of the ministry's economic crime investigation unit told reporters yesterday that three billion yuan (S$617 million) were funnelled between GSK and travel agencies since 2007. At least one GSK executive also allegedly received sexual services, in what Chinese law calls "sexual bribery"."There is always a big boss in criminal organisations and in this case GSK is the big boss," Mr Gao told reporters.Separately, two international food giants, Danone and Nestle, are being probed by the National Development and Reform Commission, the Cabinet's policy advisory body, for price fixing charges. Both companies responded swiftly. They announced that they would lower prices of their infant formula products in China, by up to 20 per cent in the case for Danone.One executive with a Chinese drug maker, re迷你倉沙田uesting anonymity, said: "Some promotional campaign activity can be very complex. For instance, for the purchase of RMB100 drug, you can get RMB10 gift items. How do you verify these promotional campaign expenses?"The industry is rife with dubious practices. At industry conferences, for example, drug companies would typically give off-the-table cash payment as pocket money (typically about US$1,000), in gifts and travel subsidies, to invited experts and guests. Travel agencies, or conference organisers, act the part of the go-betweens and are on the receiving end of commissions in promotional campaigns and overseas travel.Other practices entail all-encompassing personal services, from helping doctors' children gain admission to good schools to providing chauffeur services and paying for entertainment and meal expenses.The president of China Pharmaceutical Enterprise Association, Yu Ming-De, said that bribery was the industry's open secret and that "foreign companies are better behaved than their Chinese counterparts whose bribery activities are even worse".A top prosecutor from Beijing revealed that drug companies pay bribes, through travel agencies, to officials and staff from industry associations and hospitals by inviting them to speak at conferences, some of which might have not taken place. He identified government officials in charge of centralised drug purchases at the province levels, and doctors at hospitals, mostly state-owned, as vulnerable to corruption.China is looking to lower the cost of clinic visits to 10 yuan for patients and its new centralised drug purchasing system is estimated to have reduced medical costs by as much as 30 per cent. Drug sales going through hospitals account for as high as 80 per cent of overall drug sales in China and obtaining an entry ticket into hospital networks is considered indispensable for breaking into the Chinese market.GSK employs more than 5,000 staff, runs a research and development centre and five manufacturing factories in China. It was raided on June 27.Two other American drug companies last year settled similar charges with government authorities, the US Securities and Exchange Commission, as part of a broader investigation into their behaviour in emerging markets including China.Eli Lilly agreed to pay US$29 million to settle accusations of making improper payments to government officials and physicians in Brazil, China, Poland and Russia. Pfizer reached a US$45 million settlement to resolve charges for its subsidiaries and that of its affiliate, Wyeth.迷你倉價錢