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AstraZeneca and UCB drawn into Chinese investigations

Follows country’s clampdown on GSK bribery

China flag thumbChinese police this week detained an AstraZeneca (AZ) employee at its office in Shanghai, although the company said it believes the incident is unrelated to the ongoing probe into industry practices.

Meanwhile, UCB confirmed it is also under investigation by China's authorities, with officials from the State Administration of Industry and Commerce (SAIC) inspecting the company's office in Shanghai at the end of last week.

AZ said it believed the questioning of one of its sales representatives was related to a local police matter and it does not appear to relate to other investigations, notably the bribery allegations that have engulfed GlaxoSmithKline (GSK) over the last few days.

In addition to the serious allegations against GSK, the government has launched a wide-ranging probe into the pricing of pharmaceutical products in China, looking into the affairs of both multinational and domestic pharma companies, and is also cracking down on the illicit trade in unregistered, adulterated and counterfeit medicines.

It has been suggested that China is going on the offensive against the pharma industry as the government struggles to cope with escalating costs that are threatening its pledges to deliver affordable healthcare to its population.

Spending on drugs rose around 18 per cent in China last year to $82bn, according to Business Monitor International, while healthcare costs were up 16 per cent at $522bn, and consumer inflation is also on the rise, currently running at around 2.5 per cent.

The price of medicines in China has been a subject for debate for some years, and the GSK has heightened the level of awareness and scrutiny. One of the company's executives detained as part of the investigation - Liang Hong- has suggested that the money spent on bribes makes up nearly 20 to 30 per cent of the total price of the medicines, according to a report on China.org.cn.

GSK has already announced a review of its Chinese operations, suggesting this will likely lead to price cuts.

In a statement, AZ said it "adheres to high ethical standards in the pharmaceutical industry, and does not tolerate any illegal or unethical conduct in our business activities", adding: "all AZ China employees and third parties on AZ's behalf are required to strictly comply with these guidelines".

Meanwhile, UCB said it was one of a number of foreign and Chinese companies that have been visited by Chinese officials over the last few days, although it declined to identify any of the other firms.

One of the travel agents involved in the GSK case - Shanghai Linjiang International Travel Agency - has been shut down and its manager detained, with reports suggesting the company also had business dealings with Merck, Novartis, Roche and Sanofi.

23rd July 2013

From: Sales

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