GSK Says Chinese Executives May Have Breached Chinese Law

(RTTNews) - Pharmaceutical giant GlaxoSmithKline plc (GSK, GSK.L), under investigation for alleged bribery scandal in China, Monday said some of its senior executives appear to have breached Chinese law.

The company said Abbas Hussain, GSK's head of Europe, Japan, Emerging Markets and Asia Pacific, had a meeting with the Chinese Ministry of Public security, who are investigating whether GSK's sales personnel in China bribed doctors with cash and other perks to prescribe its drugs.

"Certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law. We have zero tolerance for any behaviour of this nature," Hussain said.

Hussain also indicated the company will review its business model. "We fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the changes for the benefit of patients in China. We will actively look at our business model to ensure we make a significant contribution to meeting the economic, healthcare and environmental needs of China and its citizens."

Hussain added that savings made from the changes in business model will be passed on as price reductions, thus making medicines more affordable to Chinese patients.

For the past few weeks, the UK-based drug maker was under scrutiny after Chinese officials alleged that GSK sales personnel in China bribed doctors with cash and other perks for prescribing its medicines, and tried to cover their tracks by using private email.

Chinese officials raided GSK offices in China and detained four senior executives on suspicions.

"I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists. We will continue to work together with the MPS and we will take all necessary actions required as this investigation progresses," Hussain added.

Separately, drug maker AstraZeneca plc (AZN.L, AZN) said authorities from Shanghai's Public Security Bureau visited its offices on Friday and took an employee in for questioning.

"We believe that this investigation relates to an individual case and while we have not yet received an update from the Public Security Bureau, we have no reason to believe it's related to any other investigations," the company said in a statement.

GSK is currently trading at $52.05, down $0.10 or 0.19%, on the NYSE.