GSK China chiefs admit bribery, tax violations

GlaxoSmithKline executives in China have confessed to bribery and tax violations, the country’s security ministry said yesterday during one of a string of investigations into foreign firms in the world’s second-biggest economy.

The ministry said the case against Britain’s biggest drugmaker involved a large number of staff and a huge sum of money over an extended period of time, with bribes offered to Chinese government officials, medical associations, hospitals and doctors to boost sales and prices.

GSK executives also used fake receipts in unspecified tax law violations, it added.

China has targeted foreign firms on multiple fronts in recent months, including alleged price-fixing, quality controls and consumer rights, forcing companies to defend their reputations in a country where international brands often have a valuable edge over local competitors in terms of public trust.

Last week, European food groups Nestle and Danone said they would cut the price of infant formula milk in China after Beijing launched an investigation into the industry.

China is an increasingly important country for international drugmakers such as GSK, which are relying on growth in emerging markets to offset slower sales in Western markets where many former top-selling medicines have lost patent protection.

IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world’s second biggest drugs market behind the United States by 2016.

“We take all allegations of bribery and corruption seriously,” GSK said in a statement.

— Reuters