GlaxoSmithKline hit with record 3b yuan fine for bribing Chinese doctors
Drug maker's former China head gets suspended three-year jail term; British firm issues apology
China has imposed a record fine of three billion yuan (HK$3.78 billion) on British pharmaceuticals giant GlaxoSmithKline (GSK) for bribing doctors to use its drugs.
Changsha Intermediate People's Court in Hunan province ruled GSK was guilty of "bribing non-government personnel". The fine imposed on GSK was the biggest ever by a Chinese court, Xinhua said. All defendants had accepted the verdict and the sentences and would not appeal, it said.
GSK would pay the fine with cash on hand and would take a charge against its third-quarter earnings, the London-based company said in a statement yesterday. GSK also published a statement of apology to the Chinese government and Chinese people, saying it "deeply regrets the damage caused".
"This has been a deeply disappointing matter for GSK," said chief executive Andrew Witty. "We have and will continue to learn from this."
The company said it would continue to invest in China and support new drugs research in the country. It also promised to make products more accessible to rural residents "through greater expansion of production and through price flexibility".
A market observer believed the case would have a positive effect on China's pharmaceutical industry.
"A heavy punishment is necessary to rescue the pharmaceutical sector," said Liao Mingtao, a senior partner at Shanghai Hui Ye Law Firm. "It was not just GSK that paid the price, and it was a lesson that all the other players, including the foreign and domestic companies, should learn."
The ruling drew to a close an investigation launched in July last year.
The investigation found that Reilly, with the support of other GSK executives, set up sales units that gained billions of yuan in illegal income by bribing doctors, hospitals and health officials to use its drugs.
The police also found that GSK vice-president Zhang Guowei, legal affairs supervisor Zhao Hongyan and Reilly conspired in 2012 to bribe law enforcement and other officials in Beijing, Shanghai and other cities to interrupt the investigation.
Xinhua said the case showed the government's determination to rule the country by law and treat all enterprises equally. The current party Central Committee's fourth plenum next month is set to promote the rule of law.
