Psychiatry, It's A Killing.: Pharma Execs Consider Fleeing China's Corruption Crackdown

June 14, 2014

Business Week has run a Reuters Shanghai article recounting how increasing numbers of senior drug company executives are considering leaving China due to the government’s on-going crackdown on bribery and corruption in the pharmaceutical industry. Last month Chinese police “shocked the business community,” says Reuters, when corruption charges were laid against the former head of GlaxoSmithKline whom now “could face decades in prison.”

“Many of our clients are asking about personal liabilities and insurance, with executives asking if they are put in jail what will happen to their families and how the company will provide protection for them,” John Huang of law firm MWE China told Reuters. A leaked memo from the Chinese Health Ministry, says Reuters, specifically named Eli Lilly, Novo Nordisk and AstraZeneca as suspect companies, while Novo Nordisk, Eli Lilly and Roche all changed their China heads in the past year.

After their own “fact-finding enquiries,” a 2013 business advisory from Deloitte’s Forensic Division in China had warned pharmaceutical executives of a list of their activities that were “risk areas” for possible corruption charges, including “payments to key opinion leaders” and gifts and travel reimbursements to health care practitioners. Deloitte’s list is similar to the activities the U.S. Department of Justice listed in its $3 billion settlement with GSK in 2012, which in large part concerned GSK’s inappropriate promoting of its popular psychotropics Paxil and Wellbutrin — though no U.S. executives were jailed.

Spooked by probes, pharma executives ask: should I leave China? (Reuters Shanghai, Business Week)

Corruption Risk in the Chinese Pharmaceutical Market (Deloitte Forensic, China)

GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data (U.S. Department of Justice)