Four GSK China execs held for investigation

CHANGSHA - Four senior executives from multinational pharmaceutical company GlaxoSmithKline (GSK) are being held by Chinese police on suspicion of having committed serious economic crimes, Xinhua has learned.

The executives, identified by their Chinese names, include Liang Hong, vice president and operation manager of GSK (China) Investment Co, Ltd, the company's vice president and human resource director Zhang Guowei, legal affairs director Zhao Hongyan and business development manager Huang Hong, according to the investigation team.

A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai in this July 12, 2013 file photo. British drugmaker GlaxoSmithKline used travel agencies and consultancies as vehicles to bribe officials and doctors and illegally boosted the sales prices of its drugs sold in China, police said on July 15, 2013. [Photo/Agencies]

In an interview with Xinhua, Liang, who supervises about 3,000 medical representatives across China to deal with hospitals and doctors, admitted that he had been "in contact with" senior government officials and medical experts.

He said he was authorized to approve an annual budget up to hundreds of million yuan.

The Ministry of Public Security announced last week that some senior executives from GSK China are being investigated for suspected bribery and tax-related violations.

The suspects are believed to have offered large bribes to government officials, medical industry associations and foundations, hospitals and doctors in order to expand the company's market in China and raise the price of its medicine.

Medicine prices are regulated by the government in China and patients rarely have a say in medical pricing.

Most of the bribes, which could account for between 20 percent and 30 percent of medicine prices, are thought to have been given through travel agencies.

According to Liang, a medicine that cost only 30 yuan could end up with 300 yuan for patients.

The police have also held and questioned the corporate representative of a travel agency suspected of being involved in the case, according to the investigation team.

Some travel agencies had reportedly offered "sex bribes" to GSK senior executives to maintain business contact with the companies.

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