GSK China bribery probe should sound alarm for foreign firms

Want China Times, Xinhua 2014-05-17

GSK's offices in Tianjin, July 25, 2013. (Photo/XIinhua)

The latest development in the GlaxoSmithKline (GSK) China bribery saga is teaching foreign firms in China a fresh lesson on business integrity.

After more than 10 months of investigation, the case is ready to be handed over to prosecutors, authorities said Wednesday.

Police investigating the case have stated that the British drugmaker offered bribes to boost sales and inflated drug prices to allow for bribery expenses and high profits.

The probe not only revealed why some imported drugs in China are disproportionately expensive, but illustrated what happens when a company chooses to focus solely on profits instead of taking their corporate responsibility and their customers seriously.

Drugs are more than just commodities. They epitomize the social responsibility of manufacturers who work to cure diseases and relieve pain through research and development.

GSK's practices in China tainted both the company's reputation and its credibility worldwide. Mark Reilly, former head of GSK China, is believed to have pressed his sales teams to bribe hospitals, doctors and other medical institutions and organizations through various means, gaining billions in illegal revenue.

The company manipulated prices to disguise real costs. The actual cost of a box of Heptodin is 15.70 yuan (US$2.55). It is declared as 73 yuan (US$11.70) at customs and priced at 142 yuan (US$22.78) as factory price. In contrast, the drug sells at about US$2.89 in South Korea, US$4.17 in Canada and US$4.81 in the United Kingdom, according to a document acquired by Xinhua.

No matter how a company tries to disguise its practices, the truth will come out eventually.

Patients and the government had to foot the bill for these expensive drugs. The health of patients might also be at stake as some doctors had the incentive to prescribe excessive amounts to get more kickbacks.

GSK's practices eroded its corporate integrity and could cause irreparable damage to the company in China and elsewhere. The case is a warning to other multinationals in China that ethics matter. Increasingly attractive to foreign investors, more and more companies see China as their most important market.

These investors should learn to respect the Chinese market, at the very least by providing quality products at reasonable prices, abandoning discrimination and honoring their due corporate responsibilities.

For those profiteers, the market will eventually make its own choice.

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"THE BRIDGE OF SWORDS" – Sep 29, 2012 (Kryon channeled by Lee Carroll) - (Text Version)

“…I'm in Canada and I know it, but I will tell those listening and reading in the American audience the following: Get ready! Because there are some institutions that are yet to fall, ones that don't have integrity and that could never be helped with a bail out. Again, we tell you the biggest one is big pharma, and we told you that before. It's inevitable. If not now, then in a decade. It's inevitable and they will fight to stay alive and they will not be crossing the bridge. For on the other side of the bridge is a new way, not just for medicine but for care. Paradigms that have not yet been thought of, which don't represent any system that currently exists, will be created and developed by young minds who have concepts that the seniors don't know about. Things that don't have integrity today will fall over tomorrow. Just get ready. It's all part of what's on the other side of the bridge. And the old energy won't like it, and they will object. …”