By Jeffrey A. Newman
The British manager of GlaxoSmithKline is reported to have fled China as four senior executives from the British pharmaceutical company are being held by Chinese police on suspicion of having bribed Chinese physicians, government officials, medical industry associations, foundations and hospitals to purchase Glaxo drugs. Reports are also circulating that Glaxo is suspected of tax-related crimes including falsely issuing exclusive valuae added tax invoices and colluding with travel agencies to issue fake invoices in order to finance their illegal payments, according to the Ministry of Public Security. Glaxo sales in China jumped 20 percent to about 1 billion pounds ($1.5 billion) last year, almost quadruple the pace of growth across its emerging markets. Police say bribes and sexual favors spurred the gain.According to news agencies some of the bribes included trade in sexual favors. Bribes paid to hospitals, doctors and health officials contributed to the resulting gains in revenue, according to the ministry, which controls China’s police. If found guilty, Glaxo could be ordered to pay a penalty of $5 million to $10 million, according to estimates by Kepler Capital Markets based on fines paid in China for similar violations. Details on the sexual favors have note been released yet. The pharmaceutical market in China is skyrocketing. The Wall Street Journal reports that China’s Healthcare spending is going to triple by 2020 and sales of pharmaceuticals in China reached 82 billion up 18% from the earlier year. Jeffrey Newman represents whistleblowers.