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    Home > Active Ingredient News > Drugs Articles > GSK fines or less than 1% of sales in China illegal cost is too low

    GSK fines or less than 1% of sales in China illegal cost is too low

    • Last Update: 2013-07-17
    • Source: Internet
    • Author: User
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    July 17, 2013 source: Daily Economic News China's Ministry of Public Security said at a press conference on July 15 that GlaxoSmithKline is currently facing charges of economic crimes The company is suspected of counterfeiting 3 billion yuan (489 million US dollars) of travel and conference expenses and engaging in sexual bribery GlaxoSmithKline's announcement said the actions mentioned in the allegations were "shameful" and violated the company's systems and values A pharmaceutical industry analyst who did not want to be named told the daily economic news yesterday (16 July) that a series of events in GlaxoSmithKline in recent years have had a significant impact on the company, including top-down personnel changes From the details disclosed by the Ministry of public security, GlaxoSmithKline (hereinafter referred to as GSK) executives involved in medical bribery "fines" are too light They use travel agencies and other channels to bribe individual government officials, a small number of pharmaceutical industry associations and foundations, hospitals, doctors and other forms to promote drug sales Since 2007, GSK has transferred up to RMB 3 billion to more than 700 travel agencies and consulting companies According to Zhu Jieyu, a lawyer at Yan Yiming law firm in Shanghai, according to the UK, July 1, 2011 According to the anti bribery act, which came into force on April, there is no limit on the maximum fine of commercial bribery enterprises In China, there are two situations, one is industrial and commercial administrative punishment, the other is criminal law violation Relevant departments determine the amount of punishment according to the amount involved, the company's sales and other factors According to foreign media reports, Kepler capital markets, based on the trial results of similar cases in China in the past, predicted that GSK would pay between $5 million and $10 million to settle the case Last year, GSK's sales revenue in China increased by 20% to about 1 billion pounds (about $1.5 billion) Even if the bribery charge is established, the fine it needs to pay may only account for less than one percent of the sales revenue In the view of many lawyers, the amount of fines paid by companies convicted of bribery may increase as the United States and the United Kingdom may impose domestic fines on illegal enterprises in addition to those imposed by third countries "So in this case, companies will not only be fined in China, but also in the UK." Zhu Jieyu said that in addition to the low cost of breaking the law in China and the low possibility of being investigated, it is also one of the reasons why enterprises dare to "take risks" in China "For the pharmaceutical industry, bribery is pervasive in the whole industry, ranging from one operation to one project And the proportion of commercial bribery and other acts of related enterprises being investigated and punished is very low, even if they are found, the amount of fines will not be particularly high " Zhu Jieyu told reporters In fact, transnational pharmaceutical companies in China are less likely to be punished for commercial bribery than foreign countries Take the case of GSK, which was exposed to be suspected of economic crimes by senior executives, who was fined $3 billion by the US FDA in July last year for "improper marketing" Schering plough, Pfizer and Johnson & Johnson have received $500 million, $1.1 billion and $2.3 billion in fines respectively However, those multinational enterprises named by the FDA as suspected of bribery or illegal marketing in China rarely get huge fines issued by Chinese industry and commerce or drug regulatory authorities It's not clear how much GSK China's turmoil will affect GlaxoSmithKline, but we can see some clues from the current situation of the company's executives According to the information disclosed by the Ministry of public security, the first wave of examination has involved four senior executives of GSK in China, namely Zhao Hongyan, 41, director of legal affairs, Liang Hong, 49, vice president and general manager of business operation, Huang Hong, 45, general manager of business development enterprise operation, and Zhang Guowei, 60, vice president and director of human resources Just last month, Zang Jingwu, the president of R & D center, was dismissed because of GSK thesis incident, while another principal resigned Looking forward, from the end of last year to now, GSK's director of government affairs, director of public relations, director of compliance, etc have also left In addition, according to foreign media, the CEO of GSK China also left China So far, GSK's personnel turbulence involves R & D, government affairs, personnel, compliance, public relations, legal affairs and other departments According to a pharmaceutical industry analyst who did not want to be named, according to his observation, a series of events of GSK in recent period have a great impact on the company, first the top-down personnel changes or even "hollowing out", then the "panic" of the pharmaceutical representatives Mark Rui, President of GSK China, told reporters earlier that GSK had established a medical promotion center as a new attempt Different from the traditional promotion method of medical representatives, GSK sold and promoted products by phone After this incident, it is not known whether this method will increase its use According to the reporter, GSK's business departments in China include prescription drugs, vaccines, over-the-counter drugs and consumer health products, including 32 kinds of prescription drugs, including fudaxin, ribetine and Botox, 8 kinds of vaccines, and 14 kinds of fenbide and new cantek In addition, the company has R & D centers and production plants in the Chinese market According to the former GlaxoSmithKline statement, China's sales revenue only accounts for 3% of global revenue, but the position of China's market is becoming more and more important According to the company's latest financial report for the first quarter of 2013, the company's prescription drug and vaccine sales fell 2% in the first quarter of this year, with the U.S market down 6% (excluding vesicare, which was up 4%, mainly due to the strong performance of the respiratory and tumor business), the European market down 3%, and the emerging markets and Asia Pacific region up 8% "Of course, our growth rate in China is much higher than the global growth rate, and our growth rate in China is also higher than the average growth rate of emerging markets, which is much higher than the global average growth rate," Ma said at the media conference at the beginning of this year "As the sales volume in China is still relatively small, only 3%, GlaxoSmithKline's China market has relatively little influence on the global market." However, the company regards the Chinese market as one of the most potential markets It will take time to see how the event affects GSK  
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