Sanofi and Novo Nordisk become latest big names in Chinese drug bribery investigation

Investigation and controversy that started with allegations of GlaxoSmithKline bribing its way into the market widens as the nation cracks down

Jeffrey Bouley
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Sanofi and Novo Nordisk have become the latest twoBig Pharma companies in China to come under scrutiny in the wake of the ChineseMinistry of Public Security announcing that a probe in Changsha, Shanghai andZhengzhou has found that some GlaxoSmithKline PLC (GSK) executives attempted tocreate new sales channels and increase drug prices in China by bribinggovernment officials, pharmaceutical industry associations, hospitals anddoctors—as well as GSK staff allegedly using fake receipts in unspecified taxlaw violations.
French drugmaker Sanofi was accused last week in theChinese media of having bribed more than 500 doctors in China in 2007 to raisesales, reportedly spending around 1.7 million yuan ($277,800) bribingphysicians at 79 hospitals in Shanghai, Beijing, Hangzhou and Guangzhou in late2007. As the Xinhua news agency is state-owned, it isn't surprising that the municipalhealth bureau in Beijing subsequently said it will coordinate an investigationinto Sanofi's practices.
Sanofi has said that it would be"premature to comment on events that may or may not have occurred in 2007"and added in a prepared statement that "Sanofi takes any allegation ofthis kind very seriously. We also are committed to cooperating with theauthorities in any review they undertake regarding these allegations."
Danish drugmaker Novo Nordisk on Aug. 1 received avisit at its Tianjin-based production facility by Chinese authorities, thoughno one visited the head office of the company in China. Novo Nordisk ChiefFinancial Officer Jesper Brandgaard said, "We were asked to provideinformation regarding our operations in China."
Although he noted it might have been part of thewidening drug bribery investigation, Brangaard noted that no allegations ofwrongdoing have been leveled at his company thus far.
"It has not been disclosed to us that we arepart of a formal investigation and we have no knowledge that we shouldbe," Lars Rebien Soerensen, Novo Nordisk general manager, told analysts recently."Having said that, I wouldn't be too surprised, if there were to be anindustry-wide investigation after the GSK situation, that we would becontacted...We've been operating in China for many, many years."
Smaller Danish company H. Lundbeck A/S also wasvisited by authorities in its Beijing unit, and near the end of July, Eli Lilly& Co. also was visited by authorities.
Still, despite the seemingly wideninginvestigation and the very public fingering of Sanofi as another offender,attention remains on British drugmaker GSK right now—a situation that began inJuly. Chinese authorities detained four Chinese executives of GSK andquestioned 18 or more other staff members under allegations that GSK funneled asmuch as 3 billion yuan ($489 million) into bribes to Chinese doctors and governmentofficials via a travel agency.
AstraZeneca, another U.K.-based pharma, has saidthat some of its employees were questioned and detained by Chinese regulatorsin the wake of the GSK allegations as well.
The ChinaDaily newspaper said in an editorial after the GSK story gained steam thatthe example of that company should be a warning to companies—whether foreign orChinese—that the law must be obeyed, further stating that the "bad apples"involved in any wrongdoing should "receive the punishment they deserve."

Jeffrey Bouley

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