Glaxo Consumer Health Unit is Linked to a US Probe In 2012


10:18 am ET
Sep 9, 2014

REGULATORY

Glaxo Consumer Health Unit is Linked to a US Probe In 2012

Reuters

For the past year, the GlaxoSmithKlinebribery scandal in China has centered on its pharmaceutical business, but newly reviewed documents indicate the drug maker became aware of compliance issues in its consumer health care business as early as 2012, according toReuters.

Glaxo confirmed that it conducted an internal investigation into procurement practices in the consumer unit in China, the news service writes. Although the drug maker tells Reuters there was no sign of “unethical conduct,” it did find “some non-compliance with our procurement procedures.” Glaxo says the inquiry was unrelated to a Chinese criminal investigation into corruption in its pharmaceutical division, which was made public last year.

The investigation focused on specific people and suppliers in China – including some employees, academics and education institutes – and was related to a U.S. Department of Justice and U.S. Securities Exchange Commission inquiry into possible violationsof the Foreign Corrupt Practices Act, according to Reuters. The law targets illegal payments to foreign government officials used to boost sales.

The news service, which wrote that it reviewed three internal Glaxo notices, stressed that the documents do not amount to evidence of wrongdoing by Glaxo or its business partners. The notices were sent by Glaxo lawyers to employees and e-mailed to senior Glaxo staff in China, according to Reuters, which adds that the drug maker has since cut ties with some suppliers.

A Glaxo spokesman tells Reuters that the notices “related to allegations around adherence to procurement policies within our Chinese consumer healthcare business. We investigated using resources inside and outside the company, and did not find evidence of unethical conduct, but did identify some non-compliance with our procurement procedures and remedial action was taken.”

The disclosure raises questions about Glaxo operations in China that had not previously been in the public spotlight. The drug maker, you may recall, has been coping with turmoil ever since bribery allegations surfaced in China, which is a large and growing market not just for Glaxo, but the entire pharmaceutical industry.

As reported previously, Chinese authorities recently accused the former head of Glaxo operations in China of ordering subordinates, his sales team and other employees to bribe hospitals, health care organizations and others. Separately, the drug maker said it is investigating claims that its employees bribed doctors in Iraq, Syria, Jordan and Lebanon.

Glaxo has previously acknowledged that some of its Chinese executives may have broken the law, but has maintained there is “zero tolerance” for bribery. We asked Glaxo for comment about this latest report and will update you accordingly.

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