More drug firms receive govt 'visits'

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More drug firms receive govt 'visits'

By Liang Fei (Global Times) 15:05, August 02, 2013

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International pharmaceutical companies Sanofi and Eli Lilly and Company Thursday confirmed that they have been approached by a local industry and commerce administration in China, the two companies said in e-mailed statements sent to the Global Times Thursday.

This is the most recent report of drug makers approached by government agencies after UK-based drug maker GlaxoSmithKline (GSK) was accused of giving bribes to doctors in China.

French drug maker Sanofi said that one of its regional offices was "visited" by the Shenyang industry and commerce administration in Liaoning Province Monday, but it is "not aware of the purpose of this visit."

US drug maker Eli Lilly also confirmed that it was "reviewed" by the Shenyang industry and commerce administration earlier this year. But it has denied that the current matter has any relation with the GSK investigation and said that it was only a "routine business inspection."

The 21st Century Business Herald reported Thursday that the two companies have been investigated by the local industry and commerce administration in Shenyang, and said that Eli Lilly may be facing a 5 million yuan ($815,500) fine. Eli Lilly denied the report of the fine.

Drug makers UCB and AstraZeneca have also been investigated by government agencies, and other major drug makers like Pfizer, Bayer, Roche are reportedly facing investigation as well, media said.

The whole industry has been tense since GSK was caught in the bribery scandal. Some international drug makers have temporarily stopped product promotion in China, and some travel agencies are reluctant to receive orders from drug makers as a travel agency was involved in the GSK scandal, media said.

"I think the current investigations into these international drug makers may be related to the GSK incident, otherwise they would not be so nervous," said Xu Lingni, an industry analyst at CIC Industry Research Center.

It has been a common practice for drug makers to give bribes or gifts to doctors and hospitals to boost sales and prices, industry insiders said. Recent media reports said that the government may be starting investigations into the sector to curb corruptive practices.

Prices of the original research drugs of foreign drug makers are much higher than the generic equivalent from domestic producers, even after their patents have expired. Though their quality is better, bribes to doctors are also part of the reason for the high prices, Xu said.

"It is possible that the government is pressuring international pharmaceutical firms to lower prices," said Zhang Wensheng, a lawyer at Beijing Jinghan Law Firm, who has worked as a drug sales representative and a doctor in the past.

At present most doctors taking bribes have not been penalized, as too many of them are involved, according to Zhang.

"The procuratorates may also need to get involved to uncover corrupt officials in hospital or government agencies that can affect drug market access," he said.