Police reveals more about GSK China's violations

Updated: 2013-09-03 13:03


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Police reveals more about GSK China's violations

The GlaxoSmithKline building is pictured in Hounslow, west London June 18, 2013. [Photo/Agencies] 

BEIJING - The Chinese police have recently revealed more details about suspected economic violations by GlaxoSmithKline (GSK) China.

The British pharmaceutical giant has been under investigation since early July for suspected bribery and tax-related violations, which have pushed up drug prices.

More individuals involved in the case have admitted some facts of the suspected transgressions. As the investigation is moving on, it is becoming clear that it is organized by GSK China rather than drug salespeople's individual behavior.

Every team for big customers has almost 10 million yuan ($1.634 million) of "public relations funds" to keep close ties with key staff in major hospitals.

Huang Hong, a high-ranking executive of GSK China, said the parent company had assigned annual growth goals as high as 25 percent in recent years, 7 to 8 percentage points more than the average growth rate of the industry.

The company employed a salary policy closely linked to sales volume. If a salesperson cannot finish the task, they can lose several thousand yuan every month.

The company's code of conduct states that every employee should abide by the country's laws and prohibits any cash transfers to doctors or government officials. Salespeople appear to have achieved targets by breaking those rules.

When investigated, the company passed the buck to salesforce, but the police investigation has found that GSK China went through the motions in internal auditing so as not to discover these violations.

Huang admitted that the growth rate of sales could not reach such a high number only by the efforts of the salespeople themselves if there was no dubious corporate behavior.

The police have also revealed details of suspected bribe taking by some GSK China executives.