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Sanofi and Lilly also visited by Chinese authorities

Follows GSK bribery allegations

China flag thumbSanofi chief executive Chris Viehbacher confirmed that one of the company's sales offices was visited by the Chinese government department that is investigating allegations of corruption by GlaxoSmithKline (GSK).

The purpose of the visit on July 29 is not yet clear, however, and it may have just been a routine inspection, he told investors on the company's second-quarter results call.

Meanwhile, Lilly is also reported to have had a visit from the State Administration for Industry and Commerce (SAIC), but has also suggested this was a routine call and was unrelated to the bribery probe, according to Chinese media reports. The company said has not received any follow-up calls form the agency.

The latest inspections come after four GSK executives were arrested on suspicion of offering bribes and kickbacks to doctors and healthcare officials in China, with at least 18 staff members questioned.  Other companies, notably UCB and AstraZeneca, have also been inspected by the SAIC over the last few days, although neither company has said it is aware of any link to the bribery probe.

Viehbacher said on the conference call that the SAIC visited Sanofi's regional office in Shenyang, one of 11 units operated by the company in China to provide sales, medical and market access functions. The company's Shanghai head office had not been contacted by the authorities on this issue, he added, so "it's too early to come to any conclusions here".

China is a key growth market for the pharmaceutical sector and companies have been alarmed by the events embroiling GSK, particularly as there is widely considered to be a culture of bribery and kickbacks within the Chinese $522bn healthcare system.

Viehbacher told investors that "you can bet that every company is looking at things very closely in China" and making sure compliance programmes are on track.

"For the moment, I don't particularly see any reason to be concerned, but … we're looking at everything, just as I'm sure every other company in the industry is doing," he said.

J&J fined

Separately, it has emerged that Johnson & Johnson has been fined for "monopolistic practices" and ordered to pay Chinese distributors 530,000 yuan ($86,000) for setting minimum resale prices for medical equipment such as sutures and staples, in further evidence of a government crackdown on practices in the healthcare sector.

J&J reportedly refused to renew distribution rights to a distributor which tried to sell its products at a discounted rate, according to the China's Supreme People's Court website, which said the decision was a "landmark ruling" for the country's antitrust regulations.

2nd August 2013

From: Sales, Regulatory

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