Telegraph: GlaxoSmithKline’s ex-China chief barred from leaving countryGSK says Mark Reilly staying in China voluntarily to cooperate with bribery probeOctober 16, 2013 | By Tracy Staton
GlaxoSmithKline’s former China chief, absent from the country when bribery allegations surfaced this summer, returned in late July to cooperate with investigators. Now, The Telegraph reports that Mark Reilly is no longer on the scene voluntarily. Chinese authorities have barred him from leaving the country, the U.K. newspaper reports.
Glaxo ($GSK) confirms that Reilly met with authorities in Changsha recently “to provide them with information and assistance.” But he hasn’t been confined to the country, much less held in a hotel room as the Telegraph‘s sources suggest. “At no point was he detained,” a spokesman told the newspaper. “Mark remains in China to help further with the investigation should it be required.”
The story the Telegraph‘s sources tell is more dramatic: Reilly was initially barred from international travel before he flew home to London in July. “The police were really angry that Reilly left in the first place,” one of the sources said. “They had put a travel ban on him.”GSK maintains that Reilly is not and was not subject to an official travel ban. If he had been–or is–he would have had company; Glaxo’s local finance chief, Steve Nechelput, was barred from leaving in July. And with dozens of GSK employees detained–and still in custody months later–confinement to China’s borders seems mild by comparison. GSK has acknowledged that some employees may have breached Chinese law, offering apologies and price cuts in recompense.
As the investigation wears on, The Telegraph notes, families of detained GSK workers have banded together to argue for leniency. Meanwhile, top officials of both countries are on the case: U.K. Chancellor George Osborne is in China now on a mission to improve economic relations, and took the chance to discuss the GSK case with his Chinese counterparts, while Chinese Prime Minister Li Keqiang is personally overseeing the case, the Telegraph says.
A cadre of Chinese higher-ups has been spearheading the investigation, which is just part of a government crackdown on alleged corruption and monopolistic pricing. Multinational drugmakers have borne the brunt of it, with whistleblowers fingering a Big Pharma who’s who, including Eli Lilly ($LLY), Novartis ($NVS), Bayer and Sanofi ($SNY). The probes have spooked doctors and sales reps alike, so the industry’s promotional activities have all but ground to a halt, and companies expect a hit to China sales. We’ll find out just how much as drugmakers unveil their third-quarter results.
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Former GSK China head Mark Reilly remains in China to help graft probePUBLISHED : Thursday, 17 October, 2013, 12:00amUPDATED : Friday, 18 October, 2013, 5:03am
Reuters in London
Mark Reilly, GlaxoSmithKline’s former head of operations in China, is helping anti-corruption officials in the country investigating allegations of bribery by the drug maker.
One person familiar with the situation said Reilly had been asked to remain in China while the investigations proceeded and was happy to do so.
Both GSK and the British embassy in Beijing said yesterday Reilly had not been detained.
An embassy spokesman said it was in regular contact with him and was providing consular assistance.
Reilly was replaced as GSK’s China head on July 25 after police accused the drug maker of funnelling up to 3 billion yuan (HK$3.8 billion) to travel agencies to facilitate bribes to doctors and officials.
GSK said at the time that Reilly would continue to help lead its response to the investigation.
“Mark is working closely with the Chinese authorities to conduct a thorough investigation and voluntarily returned to China to help them,” a GSK spokesman said.
“Several weeks ago he met with the Chinese authorities in Changsha to provide them with information and assistance. At no point was he detained. Mark remains in China to help further with the probe should it be required.”
A number of Chinese employees of GSK have been detained, including four senior members of the local management team. But the authorities have not detained any foreign nationals working for the drug maker.
The police allegations against GSK, laid out in detail on July 15, sent shockwaves through the industry and cast doubt over GSK’s ability to ensure compliance standards in fast-growing markets like China.
The crackdown reflects a growing determination by Chinese authorities to stamp out corporate bribery and corruption, which can drive up prices for consumers.
GSK has admitted that some of its Chinese executives appeared to have broken the law and has said it planned to change its business model to lower the cost of medicines in the country.
Several other international drug makers – including Sanofi, Novartis, AstraZeneca, Eli Lilly and Bayer – have also been visited by Chinese officials and the episode has undoubtedly hit sales in the mainland pharmaceutical market.
Analysts at Deutsche Bank said this week that the anti-bribery campaign was likely to last for some time, affecting both multinational and domestic drug companies.
GSK will report third-quarter results on October 23, when the scale of the impact of the affair on its business in China is expected to be revealed.
This article appeared in the South China Morning Post print edition as Former GSK China head helps inquiry