GSK China trained its staff to offer kickbacks: report

Want China Times, Staff Reporter 2013-09-08

A GSK office building in Tianjin. (Photo/Xinhua)

Further details have emerged of the bribery investigation into GlaxoSmithKline China after the company's four senior executives were taken into custody, with the Chinese-language Beijing Times reporting that executives have admitted bribing hundreds of hospitals across the country in return for drug orders.

Police in Changsha, Hunan province confirmed that these senior executives also took bribes from Comfort Group M.I.C.E. Service, Shanghai, and its sales agents.

In order to expand its sales channels and boost its prices, GSK China mostly bribed government officials, some medical associations and foundations, hospitals and doctors by offering cash or sexual favors.

A sales representative at GSK China told the paper that the company trained its employees to bribe doctors and offered nearly 10% of the money from sales to the doctors as kickbacks.

Changsha police have detained more than 40 persons connected with the case.

Huang Hong, 45, is one of the senior executives at GSK China to be detained. She said that when Mark Reilly took over as head of GSK China in 2009, he had taught Huang that generating sales was the company's primary objective.

Reilly also reportedly said that it was crucial to enter the hospital sector to boost sales and maintain good connections with the deputy heads and directors of hospitals' pharmaceutical departments as they would extend more support when it came to evaluating GSK's products.

After Reilly joined the China branch, GSK's sales jumped from 2.3 billion yuan (US$375.5 million) a year to more than 7.2 billion yuan (US$1.18 billion) through the addition of more hospital clients.

Huang stated that the PR fees for major clients had touched nearly 10 million yuan (US$1.6 million) per year.

In addition, the police investigation revealed that several senior executives at GSK China also took bribes, including Huang, Liang Hong, Gao Qiwei, procurement director Qiu Bilin and recruitment director Guo Jianhua.

The Comfort Group Service in Shanghai paid bribes worth 3.8 million yuan (US$620,000) to these four GSK executives. The group also gifted Qiu a luxury bag in 2009 and gave each of the four cash sums of 200,000 yuan (US$32,000) in 2010, 360,000 yuan (US$59,000) in 2011 and 500,000 yuan (US$82,000) in 2012 and 2013.

The group obtained 40 million yuan (US$6.5 million) worth of business from GSK China each year.