This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.guardian.co.uk/business/2013/jul/15/gsk-bribery-scandal-multinational-china
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| GSK bribery scandal: Beijing tightens grip on multinationals in China | GSK bribery scandal: Beijing tightens grip on multinationals in China |
| (2 months later) | |
| The GlaxoSmithKline allegations have highlighted China's increasingly tight grip on international firms as they vie for a foothold in the burgeoning Chinese consumer markets. | The GlaxoSmithKline allegations have highlighted China's increasingly tight grip on international firms as they vie for a foothold in the burgeoning Chinese consumer markets. |
| China-based divisions of international firms have found themselves in the sights of government investigations. Last month the National Development and Reform Commission announced an investigation into 60 pharmaceutical companies operating in China, including six internationals, among them the US-based Merck, Japan's Astellas and Britain's GSK. The moves come as China attempts to shift economic gear from an export-focused economy to one driven by domestic consumption. | China-based divisions of international firms have found themselves in the sights of government investigations. Last month the National Development and Reform Commission announced an investigation into 60 pharmaceutical companies operating in China, including six internationals, among them the US-based Merck, Japan's Astellas and Britain's GSK. The moves come as China attempts to shift economic gear from an export-focused economy to one driven by domestic consumption. |
| GSK is alleged to have used a network of more than 700 middlemen and travel agencies in China to bribe doctors and lawyers. The Chinese investigation stretches back to 2007 and involves deals worth 3bn yuan (£320m). | GSK is alleged to have used a network of more than 700 middlemen and travel agencies in China to bribe doctors and lawyers. The Chinese investigation stretches back to 2007 and involves deals worth 3bn yuan (£320m). |
| The European food packaging group Tetra Pak became the subject of an anti-trust investigation last Friday. Earlier this month Beijing announced a pricing inquiry into firms that make powdered infant formula. Western food conglomerates Nestlé, Abbot and Mead Johnson agreed to reduce their formula prices by up to 20% soon after the investigations were announced. | The European food packaging group Tetra Pak became the subject of an anti-trust investigation last Friday. Earlier this month Beijing announced a pricing inquiry into firms that make powdered infant formula. Western food conglomerates Nestlé, Abbot and Mead Johnson agreed to reduce their formula prices by up to 20% soon after the investigations were announced. |
| Imported formulas can sell in China for up to double the price charged elsewhere, as food safety scandals have left consumers wary of domestic brands. | Imported formulas can sell in China for up to double the price charged elsewhere, as food safety scandals have left consumers wary of domestic brands. |
| Some analysts suspect that China has selectively targeted foreign companies as a way to benefit domestic brands. "The state is paying the bills for these drugs, so it wants to know what it's paying for," an unnamed Chinese industry insider told Reuters. "China wants to bring down the prices of imported medicine through these methods to protect its own companies." | Some analysts suspect that China has selectively targeted foreign companies as a way to benefit domestic brands. "The state is paying the bills for these drugs, so it wants to know what it's paying for," an unnamed Chinese industry insider told Reuters. "China wants to bring down the prices of imported medicine through these methods to protect its own companies." |
| The case highlights the risks for multinational companies of operating in developing markets where corruption is the status quo. | The case highlights the risks for multinational companies of operating in developing markets where corruption is the status quo. |
| China's healthcare system is notoriously dogged by graft. Public hospitals frequently use drug sales to compensate for insufficient government funding, and doctors supplement their meagre salaries with kickbacks from pharmaceutical firms and patients. Regulators' year-old efforts to rein in malfeasance by assembling drug price databases and checking hospital invoices have barely made a dent. | China's healthcare system is notoriously dogged by graft. Public hospitals frequently use drug sales to compensate for insufficient government funding, and doctors supplement their meagre salaries with kickbacks from pharmaceutical firms and patients. Regulators' year-old efforts to rein in malfeasance by assembling drug price databases and checking hospital invoices have barely made a dent. |
| Smaller bribery cases in China are handled by commerce officials, but the GSK investigation is being led by the country's security ministry, implying that potential punishments could be severe, Jerry Ling, a Shanghai-based partner for law firm Jones Day who specialises in anti-bribery law, told Reuters. | Smaller bribery cases in China are handled by commerce officials, but the GSK investigation is being led by the country's security ministry, implying that potential punishments could be severe, Jerry Ling, a Shanghai-based partner for law firm Jones Day who specialises in anti-bribery law, told Reuters. |
| China's pharmaceutical industry is expanding rapidly as rising middle-class consumers are increasingly able to afford prescription drugs. The value of pharmaceutical sales in China surpassed £47bn in 2011, according to official statistics. The country's total healthcare spending is projected to nearly triple to more than £660bn by 2020. | China's pharmaceutical industry is expanding rapidly as rising middle-class consumers are increasingly able to afford prescription drugs. The value of pharmaceutical sales in China surpassed £47bn in 2011, according to official statistics. The country's total healthcare spending is projected to nearly triple to more than £660bn by 2020. |
| As drug sales slow in the US and Europe, international firms such as GSK are rushing to gain a foothold in emerging markets. GSK's sales in China reached almost £759m in 2012, a 17% rise over 2011 but still only a tiny fraction of the firms's global revenue. | As drug sales slow in the US and Europe, international firms such as GSK are rushing to gain a foothold in emerging markets. GSK's sales in China reached almost £759m in 2012, a 17% rise over 2011 but still only a tiny fraction of the firms's global revenue. |
| Our editors' picks for the day's top news and commentary delivered to your inbox each morning. |